FRANKFURT (AFX) - Euro area adjusted M3 grew 6.4 pct year-on-year in July, up from a year-on-year growth rate of 6.1 pct in June, the ECB said. The three month moving average of adjusted M3 year-on-year growth rate was 5.9 pct in the May-July period compared with 5.3 pct in April-June. The ECB said the adjusted figures exclude non-resident holdings of money market fund shares and units. The inclusion of these holdings in M3 has recently led to a growing upward distortion in headline M3 growth. The ECB is also studying a second distortion related to the inclusion of non-resident holdings of other marketable instruments in the M3 data and aims to publish a new series adjusted for both distortions towards the end of the year. It reiterated according to preliminary estimates this distortion amounts to around 0.75 pct. It added the increase in M3 growth year on year may partly reflect the "current relatively flat yield curve and the recent weakness in stock markets." The ECB has set a reference value of 4.5 pct for year-on-year M3 growth. The reference value is not a target but is used as a basis for monitoring trends in monetary growth.