German business confidence appears to have weathered recent financial market crises while growth in eurozone lending to business notched-up a fresh record before the worst of the turmoil, the latest data show.

The Munich-based Ifo institute said on Tuesday that its business climate index fell only slightly in August from 106.4 in July to 105.8. Businesses had become gloomier about the outlook for the next six months, which probably reflected the fall-out from the US sub-prime mortgage market problems. But their assessment of current conditions actually improved marginally.

Overall, the results "point to a further robust economic upswing," said Hans-Werner Sinn, Ifo's president.

Meanwhile, European Central Bank eurozone money supply and credit figures for July also pointed to robust economic activity. M3 expanded at an annual rate of 11.7 per cent last month - the fastest since the launch of the euro and up from 10.9 in June. Lending to business was also growing at a record rate - increasing by 13.6 per cent in July, up from 13.3 per cent in June.

The ECB regards money supply and credit figures as useful inflation early-warning signals and is likely to be concerned about the data. Without recent events on financial markets, the data would have strengthened the case for further interest rate increases.

Jean-Claude Trichet, ECB president, signalled on Monday, however, that the central bank was keeping open its options on a possible quarter percentage point rise to 4.25 per cent in its main interest rate, which had been pencilled in for September.

Economists do not believe the eurozone will escape entirely unscathed from recent financial market developments and purchasing managers' indices released last week suggested that eurozone service sector confidence had been hit. But the scale and timing of the impact remains unclear.

The latest figures suggest that eurozone housing markets have already cooled significantly as a result of increases in interest rates since the end of 2005. Lending to consumers for house purchases decelerated to 8.1 per cent in July, down from 8.4 per cent in June and the slowest since November 2003, according to ECB figures.

Julian Callow, economist at Barclays Capital, argued that a slowdown would also become apparent in the other data. "The recent market turbulence is likely to lead ultimately to reduced corporate sector leverage and so bring down M3 and loan growth, though it will take time," he said.