Growth of the ECB's M3 money supply indicator, seen as a measure of inflationary pressure, was stable at 8.7 per cent compared with a revised level seen in September, a bank spokesman said.

The bank had said last month that M3 expanded by 8.6 per cent in September.

Analysts polled by Dow Jones Newswires had expected the measure to grow by a more modest 8.0 per cent this time around, but the figure nonetheless represented the slowest rate of monetary expansion in two years.

It was released a day after German inflation was estimated to have plummeted to 1.4 per cent in November from 2.4 per cent the previous month, marking a sharp drop in Europe's biggest economy.

That underpinned the trend seen elsewhere across the 15-nation eurozone, one factor that lead ECB president Jean-Claude Trichet to say in Cairo on Wednesday that 'we are ready to cut interest rates.'

The bank's benchmark lending rate currently stands at 3.25 per cent.

In addition to its role as a measure of inflationary pressure, analysts and the ECB track money supply indicators to determine if bank lending is becoming tighter amid currently restrictive conditions on interbank credit markets.

The M3 indicator measures cash, overnight deposits, other short-term deposits, repurchase agreements, shares and units in money market funds and debt securities with a maturity of up to two years.

'The crucial question is still whether the financial market tensions have directly influenced the availability of bank loans to non-financial corporations,' Commerzbank economist Michael Schubert explained.

'The latest figures do not reveal major signs of credit supply constraints occurring,' he concluded.

But Capital Economics economist Ben May highlighted the ECB's measure of growth in lending to the private sector, which fell in October to 7.8 per cent on a 12-month basis from 8.5 per cent in September.

May felt the sharp decrease suggested 'that tighter credit conditions are feeding through to bank lending,' which he said could contract next year.

On a quarterly basis, which smoothes out exceptional movements, M3 growth declined to 8.7 per cent from August to October compared with the same period a year earlier, from 8.9 per cent in the three months from July to September.

There, analysts had expected an even lower rate of 8.5 per cent.

Mr Schubert noted however that the lower loan momentum is probably also the result of less demand from businesses and individuals. -- AFP