* What: ECB monthly policy announcement
* When: Thursday, May 7, 1145 GMT (news conference 1230 GMT)
* Expected to cut rates to 1.0 percent, maybe last cut in cycle
* ECB to reveal decision on possible alternative measures
* Alternative measures expected to include refi expansion
* Divided over bolder step of asset purchases
By Marc Jones
FRANKFURT, May 6 (Reuters) - The European Central Bank is widely expected to cut interest rates on Thursday to 1.0 percent, but markets are more focused on any "alternative measures" to get the euro zone economy back on its feet.
Analysts polled by Reuters were unanimous that the ECB would cut rates by 25 basis points to a fresh record low, finishing a job they had expected it to do last month.
There is also a strong feeling that this will be the final cut in the cycle, when the Governing Council has slashed the refi rate from 4.25 percent since last October.
Several policymakers have said they are unwilling to go below 1 percent for practical and psychological reasons. Attention is now turning to what additional steps, such as quantitative easing, they could take to fight the recession.
President Jean-Claude Trichet has promised to reveal on Thursday what, if any, unconventional tactics it will use. However, policymakers appear to be split on what to do.
Comments from influential policymakers Axel Weber and Juergen Stark suggest that the ECB is likely to extend the maximum period commercial banks can borrow funds to up to 12 months from the current limit of six months.
Economists had expected this announcement last month, just as they had predicted a 50 point rate cut to 1 percent at the Council's April meeting, whereas it delivered only 25 points.
Weber, who heads Germany's Bundesbank, has also suggested that any move on extending loan maturities should come with a guarantee that interest rates will not be cut further.
Other ECB members, including Vice-President Lucas Papademos and Athanasios Orphanides, have floated a bolder approach of buying assets such as bank bonds or commercial paper.
Economists are equally split on which path the ECB will take. "The big focus will be on what measures Trichet announces as regards as a possible step towards quantitative easing. There are a lot of options on the table," said Mark Miller, a senior economist at Bank of Scotland.
"Extending the maturities (on borrowing) is one of the safer bets but I personally feel the ECB will take a route of buying private sector assets, for example higher quality corporate bonds."
However, Nomura analyst Laurent Bilke thinks such a move is less likely at this stage. "Although some ECB board members have advocated the buying of corporate bonds or commercial paper, some national central banks are sceptical. The mixed experience of the Bank of England boosts the arguments of the latter group," he said.
BoE policymakers also meet on Thursday. They are expected to leave UK rates unchanged at 0.5 percent and interest is focused on the BoE's view on how its own programme of asset purchases is going.