Italian bank loans to business fall further in August

MILAN, Oct 8 (Reuters) - Italian bank loans to non-financial companies fell for a fourth month running in August, data from the Bank of Italy showed on Monday, signalling no let-up in the credit crunch that is crippling the euro zone's third largest economy.

The data showed that loans to non-financial firms had contracted by 1.9 percent in August from a year earlier, the sharpest contraction rate in four months of declines.

Overall loans to the private sector, which includes financial companies, were also down, by 0.2 percent, the first contraction in more than a year.

With Italy firmly into a recession, bad loans at its lenders grew by 15.6 percent in August, compared with 15.4 percent a month earlier.

On a brighter note, private sector deposits held at Italian banks rose 3.5 percent, the data showed.

(Reporting By Silvia Aloisi)

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Keywords: ITALY BANKS/