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Eurozone money supply growth picks up in April

The annual growth rate of eurozone's broad money supply, or M3, increased to 3.9% in April from 3.7% in March as deposits placed by households and non-financial corporations grew year over year from the prior month.

M3 money supply growth averaged 4.0% in the three months to April, the European Central Bank said.

The narrower aggregate M1, which includes currency in circulation and overnight deposits, grew at an annual rate of 7.0% in April, down from 7.5% in the previous month.

"Loan growth to businesses and households has plateaued over recent months. With M1 edging down, monetary developments confirm the Eurozone economic outlook to be more modest," said Bert Colijn, senior economist at ING Research.

Total credit to euro area residents grew at an annual rate of 3.0%, up from 2.9% in the previous month. Annual growth rate of adjusted loans to households remained unchanged at 2.9% and adjusted loans to non-financial corporations also held steady at 3.3% in April.

"With capacity utilization at high levels, stronger demand for lending seems logical, but with uncertainty returning to the Eurozone economy, it looks like businesses are postponing investment decisions to a certain degree," Colijn said. "With likely new elections looming over Italy in the months ahead, possibly even as an implicit euro-referendum, uncertainty will weigh on the Eurozone economy over the summer months."