By Ralph Atkins in Frankfurt

Demand for eurozone bank loans has tumbled and credit standards have tightened further, according to a European Central Bank survey that could dent confidence in the region’s resilience.

The lending survey on Friday provided grim reading for the central bank, suggesting that ripple effects from the global financial turmoil, deteriorating economic confidence and the US slowdown were feeding through into the real economy. Ken Wattret of BNP Paribas said the survey “reinforces our belief that the economy is at a tipping point”.

The survey asked banks’ loan officers about trends in demand and the credit standards they applied. Previously the ECB appeared to pay more attention to data on actual lending by banks. In March these showed economic activity was still strong, with borrowing by business expanding at an annual rate of 15 per cent – the fastest since the launch of the euro in 1999, although mortgage lending had slowed.

The ECB’s governing council was briefed about the latest lending survey results in Athens on Thursday and Jean-Claude Trichet, its president, later noted the “apparent paradox”. His comments suggested the ECB had become more suspicious about the lending data, which could have been distorted if companies had drawn down prearranged credit lines or switched from raising funds in capital markets.

At the same time, the lending survey could be providing advance warning of a downturn in lending that has yet to emerge in the actual data. In the US, trends indicated in loan officer surveys lead actual changes in bank loans by about 18 months, according to Julian Callow of Barclays Capital.

Much of the growth in eurozone business borrowing has been driven by Germany, but signs have emerged that investment spending in Europe’s largest economy might be cooling.

The latest eurozone loan officers’ survey showed demand for loans by enterprises plunging in the first quarter of this year to the weakest since April 2004. The previous survey had shown net demand remained slightly positive, but Friday’s study showed 30 per cent reporting in April that demand had fallen, compared with 13 per cent reporting an increase – a net balance of minus 17 per cent.

The fall-off in demand had largely reflected trends in merger and acquisition activity, the ECB said, but the latest survey also showed a strong decline in demand for funds for fixed investment.

Asked about credit standards they applied to business loans, a net balance of 49 per cent reported a tightening, up from 41 per cent in January and the second highest level after the first survey in January 2003, when the eurozone was in a growth trough.

Demand by households for mortgages, meanwhile, dropped to the lowest since the survey began. A net balance of 33 per cent reported a tightening of credit standards applied to loans to households – also a record.

Mr Trichet argued on Thursday that there were still “no significant signs of supply constraints on bank loans”.

But Mr Wattret said it was clear that the behaviour of banks had changed.