Berlin - Germany has reduced the scale of its credit guarantees for firms exporting to Iran, but has not stopped them altogether, a government spokesman said Monday.

The business newspaper Handelsblatt reported earlier in the day that German companies trading with Iran will no longer receive government backing.

The newspaper said the move was a response to growing criticism from Germany's partners, particularly the US and Israel, that German trade with Tehran has significantly increased since 2008, despite UN sanctions against Iran's atomic programme.

German exports to Iran increased by 10.5 per cent to 3.58 billion euros (4.65 billion dollars) in November 2008 on an annual basis, Handelsblatt added.

Government spokesman Thomas Steg said the credit insurance had been "considerably reduced" to underscore Germany's position towards the controversial uranium enrichment programme.

But he said no decision had been taken on a complete halt to the guarantees, which are designed to protect German companies in event of non-payment by foreign debtors.

Western countries believe Iran is enriching uranium with the goal of making weapons, but Tehran says the programme is geared to providing energy for homes and factories.

Germany supports the European Union (EU) strategy of promising benefits to Iran if it halts the programme, while tightening sanctions if it does not. (dpa)