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FRANKFURT (Reuters) – Loans to private sector companies and households in the euro zone fell in December from the previous month, European Central Bank data showed on Friday, adding to signs of a credit crisis in the currency bloc.

The monthly flow of loans to firms dropped by 37 billion euros after falling by 7 billion euros in November.

Euro zone M3 money supply – a more general measure of cash in the economy – grew at an annual 1.6 percent in December, slowing from 2.0 percent in November and below expectations of 2.2 percent in a Reuters poll.

There is a tentative evidence of a modest credit crunch in the numbers with growth of loans to the private sector decreasing significantly, said Holger Schmieding, economist at Berenberg Bank.

These numbers on their own are a reason for further monetary easing. The ECB is still likely to cut interest rates in March, and they will have to revise down their growth forecasts, he added.

(Frankfurt Newsroom; Editing by Catherine Evans)