SPAIN credit crunch deepens:

Lending by Spanish banks contracted by 2.64% on the year in September, the sharpest annual decline on record, pointing to a deepening credit crunch in Europe's fourth-largest economy.

Data released Friday by the Bank of Spain showed that some €48.4 billion in credit was removed from the Spanish economy over the past year through September. The decline was the biggest on record in the country since the central bank began to track lending growth in 1962.

September is normally one of the most active months of the year for lending in Spain. A year earlier, banks extended €17.5 billion in additional loans that month. This year, the increase from August was a meager €892 million.

"The rate of decline is starting to be alarming," said Maria Lopez, a banking analyst with Espirito Santo Investment in Madrid.