Japanese bank lending rose 0.5 percent in December from a year earlier to 395.83 trillion yen (5. 14 trillion U.S. dollars), marking the third straight month of increase, the Bank of Japan (BOJ) said in a report on Thursday. The increase marked the largest lending rate since October 2009 when lending surged by 1.5 percent, the central bank\'s figures showed and followed a 0.2 percent rise logged in November. The third consecutive year-on-year increase reflects the fact that corporate funding requirements continue to normalize following last year\'s March twin-disasters and demand for business operating funds in the hardest-hit regions remains stable. The BOJ said that while on a day-to-day basis operations for business remained relatively strong and that bank loans to firms were making their way back to pre-quake levels, capital spending demands were likely to remain flat for the time being due to global economic malaise, downside pressures from Europe\'s sovereign debt woes, as well as from a persistently strong yen. The BOJ\'s figures also revealed that combined loans held by the country\'s four main categories of banks, including \"shinkin\" or credit unions, increased 0.4 percent to 458.24 trillion yen in the recording period, marking a rise for the second straight month and followed a 0.2 percent rise logged a month earlier, according to the bank\'s data. In addition, outstanding loans by city banks, the largest group of lenders in Japan, dropped 1.0 percent from a year earlier, marking the 25th straight month of year-on-year decline, following a 1.4 percent drop logged a month earlier, the figures also showed. But Japan\'s central bank noted that lending by regional banks continued to show an uptick, rising 2.0 percent in the recording period, following a 1.9 percent increase logged in November. The balance of commercial paper issuance, meanwhile, came in at 10.12 trillion yen (131.65 billion U.S. dollars) at the end of December, dropping 1.5 percent from last month, after a 2.3 percent retreat logged in November, according to the latest BOJ data.