UPDATE 1-ECB's Liikanen says December rate cut "possible"

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HELSINKI, Nov 7 (Reuters) - The European Central Bank may cut rates at its next rate-setting meeting in December, ECB Governing Council member Erkki Liikanen said on Friday.

When asked whether the ECB would cut rates further next month, Liikanen told Finnish television: "It is possible."

"It will be decided then," Liikanen told national broadcaster YLE. "We do not make decisions beforehand, but when we have the latest information."

ECB cut its headline rate by 50 basis points to 3.25 percent on Thursday and signalled another reduction was possible next month. [ID:nL6714336]

Economy would continue to sputter in the near-term, said Liikanen -- who also heads the Bank of Finland -- speaking later on MTV3 television, and added he saw recovery starting late next year, partly thanks to government measures.

"The actions that governments have taken have stopped the financial crisis from worsening."

The ECB would act to ensure price stability to aid economic recovery.

"Sticking to price stability, and it looks now that good progress has been made on that front, is important," Liikanen said.

Liikanen said he saw market lending rates continuing to fall in the euro-zone and confidence among banks improving after government actions.

"In early October, there was fear of further bankruptcies," Liikanen said. "Such fears have reduced, it is known large banks will survive, it is known countries are ready to aid banks."

"Partially, progress has been made, but of course there are still problems ahead." (Reporting by Sakari Suoninen; Editing by Tomasz Janowski)