The average daily lending balance of Japanese banks in fiscal 2004 fell 3.5 percent from the previous year to 386.05 trillion yen, extending the downtrend to eight consecutive years, the Bank of Japan said Tuesday.

However, the drop was 1.4 percentage points less than in fiscal 2003, reflecting an upturn in the economy, central bank officials said.

Lending by major banks remained sluggish as they put priority on dumping nonperforming loans.

But lending by regional banks was robust on active cofinancing deals in urban areas, the officials said.

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