Credit still tough for small euro zone firms - ECB

The survey is likely to take some of the shine off the more upbeat results from the ECB's bank lending survey, which earlier in the week showed that banks expect to end the recent trend of tightening the rules for companies to obtain credit.

Looking at more than 7,500 firms, the survey said that while demand for funding had risen between October and March, loans were harder to come by, with a fifth saying the situation had deteriorated, compared with 14 percent in the previous round.

The survey added that in six months ahead, the firms expect a further slight deterioration in their access to bank loans and bank overdrafts.

Looking back, the building sector was hit the hardest, while smaller firms said their applications for loans were being more regularly rejected. In contrast, larger firms, found it easier to get access to bank loans, seeing only a 4 percent drop in net terms, compared with 10 percent in the previous survey.

That split is likely to have played a role in the changes the ECB made to its lending rules at the end of last year, which were designed to make it easier for smaller banks - which typically fund local businesses - to get cheap funding from the central bank.

Breaking it down by country, firms in countries hardest hit by the euro zone debt crisis, suffered the most. The biggest deterioration compared with the last survey was in Belgium, Spain and Italy.

Almost half of Greek firms had seen credit availability worsen, and 35 percent in Portugal and Ireland.

(Reporting By Eva Kuehnen)