(Adds Bini Smaghi, paragraphs 8, 9)
FRANKFURT, Nov 14 (Reuters) - European Central Bank officials talked up the chances of interest rate cuts on Friday as the euro zone entered its first recession in its 10-year history.
Data showed the financial crisis had helped trigger a 0.2
percent contraction in the bloc's economy between July and
September after a similar contraction in the second quarter.
ECB Governing Council member Miguel Angel Fernandez Ordonez said he was not surprised and the bank could lower interest rates again in December as inflation falls in response to the problems.
"(ECB President) Trichet already said this after the last meeting, clearly there's a chance, clearly," Ordonez told Reuters.
Trichet also said he wasn't surprised, blaming the buffeting the euro zone economy had taken since the financial crisis intensified in September.
"We have had this information, it is not surprising, we had said that the real economy was hit by the turbulences," he told Bloomberg Television.
"As far we see it, at the level of the euro area as a whole there is, I would say, stagnation with negative figures."
ECB Executive Board member Lorenzo Bini Smaghi said there was room for further rate cuts if inflation falls.
"We've reduced interest rates by 100 basis points already in less than a month. There is the possibility, if inflation continues to fall, of a further relaxation," Bini Smaghi told Italian state television RAI.
"What's important is that these reductions are transferred to the citizens, savers, by the financial system."
Economists' expectations for the ECB to cut rates by another 50 basis points in December were also bolstered by comments from Cypriot ECB policy maker Athanasios Orphanides.
"We cannot rule it out and indeed I do not think that a further easing of monetary policy under the circumstances should be considered unlikely," Orphanides said in an interview with Reuters television.
On top of Friday's grim data, he said ECB staff forecasts to be published at the start of December would be far more pessimistic on euro zone growth than the previous set.
"Today's data indeed reflect what we already knew in the last few months, a deterioration in the real economy. I expect that the forecasts we will see by Eurosystem staff at the beginning of next month... will be much more pessimistic than the previous forecasts," Orphanides said.
GOING DOWN
Two quick-fire cuts since October have taken ECB interest rates down a full percentage point to 3.25 percent as inflation fades.
Most analysts now see a 50 basis point cut to 2.75 percent in December, according to a Reuters poll, and some see the benchmark rate slashed as low as 1.75 percent by next spring as policy makers try to spur an economic recovery. [ECB/INT]
Orphanides said the positive side of the growth problems was that the inflation outlook had improved and speaking at an ECB conference in Frankfurt, ECB Executive Board member Juergen Stark said the financial market upheaval could hurt growth for an extended spell.
"Financial turbulence is likely to dampen demand in the euro zone and the world for quite some time," Stark said. "It might in fact prove a litmus test for the functioning of EMU (monetary union) both in economic and institutional terms."
(Reporting by Phil Stewart in Rome, Andrew Hay in Madrid, Marc Jones, Krista Hughes and Tamora Vidaillet in Frankfurt; Editing by Ruth Pitchford and Chizu Nomiyama)