Bank lending in Ireland sees steepest fall since late 2011

FRANKFURT (Reuters) - Lending to companies and individuals in Ireland fell at the fastest rate since October 2011 in June, data from the European Central Bank showed on Friday, highlighting one of the impediments to growth in the euro zone.

The currency bloc is slowly emerging from the worst crisis since it was founded in 1999 as many members are scaling back government spending, reining in debt and reforming their labour markets, while banks are still reluctant to lend in some parts.

ECB data on Friday showed that the situation is only slowly improving. Lending in Ireland continued to decline in June, falling by 10.8 percent compared to a year earlier, its strongest dip since October 2011.

Lending also declined in Spain, at an annual rate of 9.0 percent in June, data showed. Lending there declined by more than 10 percent each month over the course of last year. The rate of decline has since slowed slightly.

The ECB has cut interest rates to record lows and will offer banks more long-term funding at ultra-cheap rates later this year to encourage them to lend more freely, especially in the countries hit strongest by the crisis.

(Reporting by Eva Taylor)