* ECB refinancing and deposit rates seen unchanged this week
* December's enthusiasm for deposit rate cut erased
* Traders poised to act on any signals of future cuts
LONDON, Jan 7 (Reuters) - A risk-hungry start to the year means traders are not positioned for the European Central Bank to ease lending conditions by cutting rates on Thursday, but sensitivity to any signals on future cuts will remain high.
After a roller-coaster December, in which expectations of a cut to the central bank's deposit rate built up and were subsequently dashed, pricing suggests traders are betting on a wait-and-see approach from the ECB in January.
"My feeling is that the pressure to cut has eased a bit... a negative deposit rate is no longer priced in," said Elwin de Groot, market economist at Rabobank in Utrecht.
"After the last meeting we saw the market positioning themselves for one more rate cut into January. Since then the market has come away from this view and now it is not so strongly positioned any more for a near-term cut."
The refinancing rate at which the central bank lends money is the main tool used to encourage bank lending and boost the economy. But banks are already flooded with cheap ECB loans, meaning the deposit rate charged on excess reserves has a more significant impact on short-term interbank borrowing costs.
Forward rate agreements, used to bet on where the Eonia overnight borrowing rate will be in the future, have recovered from a steep fall last month that was triggered by ECB President Mario Draghi revealing a deposit rate cut had been discussed.
Other ECB members have since played down the likelihood of a cut, driving a rally in Eonia forwards. The contract linked to the July ECB meeting now trades at 0.057 percent, having hit a low of -0.054 percent in the December fall.
The ECB has repeatedly been pressed into action by Europe's worsening debt crisis over the last three years, but has bought some calm with its latest, as-yet untested, promise to buy bonds issued by states that seek an official bailout.
Expectations that rates will be left unchanged after Thursday's meeting are supported by the strong start to the year for risky euro zone bonds after a late deal to avert a fiscal crunch in the United States.
"Since the December meeting, the economic situation in the euro zone has stabilised and the mood in the financial markets has improved, especially after the agreement in the U.S. to avoid the fiscal cliff," Barclays Capital analyst Giuseppe Maraffino said in a note to clients.
Barclays had previously forecast a cut in January but now expects rates to remain on hold, with the ECB leaving itself open to a cut in the future.
Nevertheless, the fact that few are expecting a cut to either of the bank's key rates on Thursday means markets will be sensitive to any insight into the bank's thinking on whether policy could loosen in the future, analysts said.
"Given the developments of the last four weeks or so, any slightly dovish language could give the market a bit of a turnaround," de Groot said.
That effect would be felt in both Eonia forwards, which fall on speculation about a deposit rate cut, and a rise in Euribor futures which also incorporate the markets view on the refinancing rate outlook.