* Ordonez and Noyer say the bank could cut rates again
* Ordonez says keen on alternative measures
* German data adds to hopes of economic recovery
* Germany hopes to have bad bank draft law by May
By Andrew Hay and Sophie Hardach
PARIS/MADRID, April 21 (Reuters) - European Central Bank policymakers gave the latest signal the bank is in the final throes of its rate cut cycle on Tuesday, but steered clear of the hot topic of what else it might do to ease credit.
A flood of hints from top ECB policymakers in recent weeks has left economists near-certain that the ECB will trim interest rates to 1.0 percent from 1.25 percent next month, probably for the last time.
Bank of Spain Governor Miguel Angel Fernandez Ordonez and Christian Noyer, the head of France's central bank and the ECB's former Vice-President, became the latest to bolster that view, saying the ECB only had minimal rate cut ammunition left.
"It seems there is a margin for a cut in all our key interest rates but that this margin is not very big," Noyer said in a French radio interview.
A number of influential ECB members have said they are reluctant to cut the bank's headline rate below 1 percent. They are now looking at other options to help the recession-hit euro zone, and the bank's President Jean-Claude Trichet has promised to lay out its plans next month.
Analysts see the possible moves as the ECB's version of quantitative easing -- alternative forms of stimulus already being used in the U.S., Britain, Japan and some other major economies.
Bank of Spain Governor Ordonez said he was keen to introduce the alternative measures, but like most of his ECB colleagues, refused to give any details of what these measures would be.
Along with Ireland and Greece, Spain has become a euro zone poster child for the crippling impact the financial crisis has had on previously booming, property-driven economies.
GLIMMERS SIMMER
The bank's decision makers appear to hold differing views on the best next step.
Bundesbank President Axel Weber has said it should stick to trying to coax banks back into lending while others, including Vice-President Lucas Papademos, have suggested the bolder approach of buying assets -- similar to the U.S. Federal Reserve and Bank of England.
Papademos is due to speak in the European Parliament in Strasbourg later to present the ECB's 2008 annual report. As well as giving the ECB's latest reading of the economy, it should also reveal what toxic assets it is holding as a result of its open arms approach to collateral in its liquidity operations.
Noyer also became the latest in a growing line of policymakers to note signs of stabilisation in the economy.
"What is important is to know whether we're stabilising," he said. "We have a group of indicators which show us that things are a little bit less bad in recent months, in recent weeks, than was the case two or three months back."
Policymakers remain cagey about calling an end to the problems. ECB President Jean-Claude Trichet warned at the weekend against reading too much into improvements in data indicators. But signs of optimism from bellwether firms like General Electric and some better than expected banking sector results have fuelled hope among economists.
Noyer noted the combined impact of stimulus spending by governments around the world and rate cuts by central banks, saying: "We have good reasons for thinking that we could have an economy that will stabilise at the end of the year and (see) a recovery in 2010."
BAD BANK
Bolstering hopes the global malaise may be lifting, German economic sentiment jumped on Tuesday and the world's third largest retailer Tesco reported bumper profits.
The ZEW think tank's April poll of German economic sentiment rose to 13.0 from -3.5 in March, the first time since July 2007 that the index has hit positive territory..
German Finance Minister Peer Steinbrueck also revealed the German government hoped to have a draft law in place in May to allow banks in the country to rid themselves of their toxic assets.
However, the weakness of global demand for goods was underscored by a steeper than expected fall in German producer prices in March, when prices fell year-on-year for the first time in five years.
"Optimism alone is unlikely to be enough to offset the downside risks that beset the German economy at the moment," said Daiwa Securities European Economist Colin Ellis.
"In particular, there is little reason to think that external demand -- the engine of growth in recent years -- is set to bounce back strongly."
(Additional reporting by Noah Barkin in Berlin and Krista Hughes in Frankfurt, Writing by Marc Jones; Editing by Ruth Pitchford)