UPDATE 1-ECB could withdraw more crisis support in H1-Weber

* Won't rule out withdrawal of further crisis measures in H1

* ECB sets interest rates for needs of whole euro zone

* Sees growth of 1.5 pct next year, no threat of inflation

* Against part of Obama plans to split banks

(adds quotes, detail, combines stories)

By Marc Jones and Sakari Suoninen

FRANKFURT, Jan 27 (Reuters) - The European Central Bank could remove more of its crisis support for the economy in coming months and will not set interest rates to suit the euro zone's few troubled members, Governing Council member Axel Weber said on Wednesday.

On the hot topic of the ECB's "exit strategy" for withdrawing the emergency steps taken to support banking and the economy since 2008, Weber said the bank would continue to slowly take away support measures this year having kicked-off what is expected to be a 1-2 year process in December.

"As the economy improves, we'll take some of the exceptional measures back," Weber said in an interview with Bloomberg Television at the World Economic Forum in Davos, Switzerland.

"Not all measures are needed to the same degree, so I don't rule out that we take some additional steps even before the second half."

ECB Board member Juergen Stark said this week that the bank would decide whether to take further steps to withdraw support in March when it was armed with new in-house economic forecasts.

Weber said that it would have to keep some support in place over the middle of the year when banks have to pay back the 442 billion euros they borrowed from the central bank last June.

"We will have to discuss during this year the return to normal tender procedures," he added in a separate interview with CNBC, referring to the ECB's current unusual practice of lending banks as much money as they want at a fixed rate.

"It is a big step and it will not occur in all operations at simultaneously. It will be gradual and phased in."

GREECE

Weber also kept up the tough European rhetoric towards Greece following recent revelations that it hid the true scale of its budget deficit problems.

"We have to do monetary policy for the (monetary) union as a whole... we cannot take into our decisions developments in certain parts," Weber told broadcaster CNBC in an interview in Davos.

He said Athens had no option but to meet its promise to slash its deficit, while it was "absurd" to think that Greece could quit the single currency in the wake of the problems.

Weber, who heads Germany's Bundesbank, added that euro zone growth was expected to be around 1.5 percent next year, and said that there were no signs of a worrying surge in inflation.

"We don't expect inflation to significantly surpass 2 percent, so what we are seeing is in line with our definition of price stability and on that end, I am not concerned," Weber told Bloomberg television in a separate interview, adding the ECB's current record low 1 percent interest rates were "appropriate."

On the economy Weber said it would still take another 2 or 3 years for the level of real income in the euro zone to recover to its pre-crisis level, and that governments and central banks would have to keep support in place this year.

"The economy is not standing on its own feet yet, it needs the support of expansionary fiscal and monetary policy during large parts of this year," he told CNBC.

OBAMA

Weber was also asked about U.S. President Obama's plans to cut the size of banking giants and force them to split off their more risky --and often most profitable-- trading activities.

"I am (cautious of separating investment and retail banking activities) because I think it is going all the way in a very sort of strong fashion," he told CNBC.

But he said the plans were focused in the right direction and admitted that, despite his reservations, Europe could replicate the ideas, albeit at what would have to be a slower pace.

"What we have said is we need to limit the activities, we need more capital against some of the more risky activities... Even if we go all the way (match Obama plans), it has to be phased in a gradual manner," He said.

Asked about reports that China had been one of the key buyers of Greek debt in a closely watched auction this week, Weber avoided a direct response.

"We have to take into account that China is now a player in the global financial markets."

"I am happy for Chinese and others to participate in our global financial system," he said.

(Reporting by Marc Jones; editing by Patrick Graham) marc.jones@thomsonreuters.com; +49 (0)69 7565 1219; reuters messaging: marc.jones.reuters.com@reuters.net))