FRANKFURT (Reuters) - European Central Bank President Jean-Claude Trichet said on Thursday the ECB would monitor price risks and financial markets very closely, toning down his anti-inflation rhetoric after it left its key interest rate at 4.0 percent.

Trichet noted that volatility on financial markets in the past few weeks had raised uncertainty about the euro zone economy. "Given the high level of uncertainty, additional information is needed before further conclusions for monetary policy can be drawn," he told a news conference.

"The Governing Council will monitor very closely all developments on the basis of our assessments and by acting in a firm and timely manner we will ensure that risks to price stability do not materialize," he continued.

Trichet did not repeat the ECB's stance of "strong vigilance" on inflation risks, wording which has preceded most of the rate increases in the ECB's current tightening cycle, but said he would use the phrase again when the time was right.

Trichet's use of that phrase at his last media briefing on August 2 made many economists expect a rate rise in September, until money market conditions tightened sharply in the wake of the U.S. subprime mortgage crisis.

Trichet declined to explain what exactly "monitoring very closely" meant, but said upside price risks remained, third quarter economic sentiment data was favorable and strong emerging market economic growth was likely to offset a U.S. slowdown.

"As regards the financial markets, we will continue to pay great attention to developments over the period to come," he added.

Economists said the change in ECB language showed that the ECB did not want to tie itself down to raising rates in October.

"By failing to indicate that 'strong vigilance' is needed to ensure that risks to medium-term euro zone price stability do not materialize, the ECB is taking (care) not to commit itself to raising interest rates in October at least, and to leave its options fully open," Howard Archer, chief European economist at consultancy Global Insight, said in a note to clients.

The ECB left its central forecasts for euro zone inflation and growth substantially unchanged. It forecast inflation of around 2.0 percent for 2007 and 2008, and said growth was likely to ease to 2.3 percent next year from 2.5 percent in 2007

Energy costs were likely to push annual inflation up from its current 1.8 percent this year, and next year wage inflation would probably be a key factor in pushing up consumer prices, Trichet said.

MARKET INTERVENTION

Earlier on Thursday, the Bank of England left its benchmark rate unchanged at 5.75 percent.

The ECB also held its marginal lending rate, at which banks can get emergency overnight loans, steady at 5.0 percent and kept its deposit rate at 3.0 percent.

Some money market traders had speculated that the ECB might cut its marginal rate, following the U.S. Federal Reserve's example, to put a cap on interbank lending rates, which surged past 4.5 percent on Wednesday.

Trichet said the ECB would hold an extra tender of longer-term securities to ease credit costs beyond the overnight market where the bank has intervened most heavily.

Highlighting tensions in money markets, the ECB lent banks an extra 42.2 billion euros in temporary overnight funds on Thursday after noting that money market volatility had increased, its first such emergency operation since mid-August.

Altogether 62 out of 82 economists polled by Reuters last week had expected the ECB to keep rates on hold this month, and more economists had scrapped their forecasts of a September rate rise since then.