WRAPUP 1-ECB policymakers talk tough on rates, Bonello demurs

* Belgium's Coene says rates probably too low

* Slovakia's Makuch urges vigilance on inflation

* Nowotny says rate hike expectations well founded

* Malta's Bonello warns against raising rates quickly

* ECB policymakers rule out Greek debt restructuring

By George Georgiopoulos and Sakari Suoninen

ATHENS/FRANKFURT, April 18 (Reuters) - European Central Bank policymakers mostly talked tough on the need for further interest rate hikes, with Malta's representative a lone dovish voice amid growing market unease about euro zone debt.

As ratesetters ruled out a debt restructuring for Greece that many investors believe is now on the cards [ID:nLDE73H0M1], Belgium's Luc Coene said rates were still probably too low for current economic conditions and should be increased.

"The interest rates we had were maybe appropriate when we were in the depth of the crisis but probably are not appropriate anymore," Coene, who has headed the Belgian central bank since the beginning of this month, told news agency Bloomberg.

"We have to adjust them."

Slovakia's Jozef Makuch echoed Coene's hawkish stance, saying the 17-country bloc's central bank would be very vigilant on inflation risks. "Then we will react. This is necessary," he told news agency Market News International.

Higher rates would further complicate efforts by Greece and other high-yielding states on the euro zone periphery to manage their debt, an issue touched on by Malta's Michael Bonello.

"As long as inflation expectations remain well anchored, monetary growth remains moderate, which it is, and there is no clear sign of second-round effects, then we must be careful not to make it more difficult for countries to grow out of their debt problem," he told Bloomberg.

"In uncertain circumstances like these, we need to balance doctrine with pragmatism," he said, and added it was important for the central bank to preserve its options.

HIKE EXPECTATIONS

The ECB raised euro zone interest rates by a quarter of a percent to 1.25 percent earlier this month, ending almost two years of record low borrowing costs. [ID:nLDE7351QH]

Two-thirds of the 62 economists polled by Reuters after the hike expect another rate rise by July at the latest. [ECB/INT]

Austria's Ewald Nowotny was quoted by Bloomberg as saying market expectations for more hikes this year were "well founded".

"The exact timing is a matter to be decided according to the economic situation," Nowotny said.

Nowotny told MNI in a separate interview that the euro zone can cope with a stronger single currency.

The euro has risen about 7 percent against the dollar this year and topped $1.45 last week for the first time in 15 months, but it fell on Monday on growing concerns about debt focused on Greece and Portugal. It traded at $1.4275 by 1200 GMT.

Despite his warnings on the negative impact of raising rates, Bonello said interest rates remained low. He saw an improvement in money market functioning and advocated rewidening the difference between ECB policy rates to pre-crisis levels.

Increasing the difference between deposit and marginal lending rates would increase the incentive for banks to lend to each other instead of parking their money at the central bank.

Many economists expected the ECB to have rewidened the corridor this month, but the central bank kept it unchanged.

BAILOUT PRESSURE

Pressure on financially weak euro zone members was also increased by a Finnish vote showed mounting public opposition to more bailouts, while Greece reiterated it would not seek a restructuring -- a stance supported by central bankers. [ID:nLDE73H0IC]

A restructuring was not needed and would be catastrophic for the country, hitting bank and pension fund assets and closing off access to capital markets, Greek central bank head George Provopoulos said.

Slovakia's Makuch said that, while it would take time for Greece to get back on its feet, a renegotiation of its debt should be ruled out.

"It is no time to say something about restructuring," Makuch said. "... There is a lot of work (to be done), but the theme is not restructuring just now."

Bonello agreed, while Executive Board member Lorenzo Bini Smaghi said only speculators would gain from a restructuring.

(Writing by Sakari Suoninen; Editing by John Stonestreet)