The MAS said the rate of growth in bank lending to most major sectors of the economy fell year-on-year, and month-on-month total loans showed a slight decline.

The commerce sector had negative year-on-year growth of 1.8 per cent, having already contracted every month since the beginning of 1998.

``With the commerce sector in recession, bank lending to this sector is not likely to pick up in the near term,'' the MAS said.

The property market was an exception, with credit extended to the building and construction sector relatively strong at 12.4 per cent year-on-year growth.

In contrast, manufacturing showed year-on-year growth of just 2.3 per cent, down from 4.1 per cent in March.

Narrow M1 Money supply contracted by 4.5 per cent in April year-on-year after shrinking an average of 5.3 per cent in the first quarter of1998.

Part of the M1 Decline reflected higher interest rates which ``raised the opportunity cost of holding cash balances or their equivalent,'' MAS said.

But it added that the reduction ``would also reflect weakening demand for transaction money balances in a slowing economy.''

Bank ``foreign assets declined due in large part to a fall in the amount of offshore lending to both banks and non-bank customers,'' the MAS said.

Regional economic weakness slashed at the Asian dollar market, where activity fell 7.1 per cent year-on-year in April to reduce total assets by US$17 billion to just under US$500 billion.

``Most of the decline, which has continued unabated since December, has reflected the shrinking of loans to Asia.