By Ingrid Melander

ORLEANS, France (Reuters) - The European Central Bank will keep its loose and growth-supportive monetary policy stance in place for "quite a long time", ECB executive board members said on Friday.

With the euro zone economy stuck in recession, the ECB cut its main refinancing rate to a record low of 0.5 percent and extended its provision of unlimited funds to banks by a year at its May policy meeting,

Inflation fell to a three-year low of 1.2 percent in April, allowing some room for maneuver.

The ECB's Joerg Asmussen told journalists in Berlin the bank's monetary policy would remain expansive for as long as needed.

His colleague Benoit Coeure hit a similar tone when speaking at a conference in Orleans in France, saying the ECB was committed to providing the euro zone with abundant liquidity for as long as necessary.

"We are saying that because we are well aware that rigidities and difficulties of transmission in the euro zone mean that the monetary policy will have to stay accommodative for quite a long time," Coeure said.

The ECB's record low interest rates do not reach euro zone countries evenly because funding costs for banks in the periphery are higher than in the euro zone's core countries. That makes it more expensive for households and companies to borrow.

ECB President Mario Draghi said last week the bank would monitor incoming data closely and would be ready to cut rates again, including the deposit rate currently at zero, which would mean it would charge banks to keep their money overnight.

Market talk that the ECB was checking with banks whether they would be prepared for such a step weighed on the euro against the dollar and German Bund future rose as much as 40 ticks to 145.71.

Tech ECB had not immediate comment.

By charging banks for overnight deposits, the ECB would give banks with excess liquidity - mainly those in core countries - an incentive to start lending again to banks in the periphery, which are for now more reliant on the ECB for funding.

Italy's central bank governor, Ignazio Visco, would be in favor of negative deposit rates. He was quoted earlier this week as saying it would be an effective way to help the euro zone economy.

But the step could also backfire as banks might pass the costs on to their customers.

(Reporting by Ingrid Melander in Orleans, Annika Breidthardt in Berlin, writing by Paul Carrel and Eva Kuehnen Editing by Jeremy Gaunt.)

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LONDON (Reuters) - Google Inc's Executive Chairman Eric Schmidt is due to meet British Prime Minister David Cameron on Monday as a participant of an advisory group just days after UK lawmakers lambasted the Internet company's tax affairs.

The meeting is a routine one and has been long-planned, will include other high-profile business people, and tax evasion is not on the agenda, a government source told Reuters.

Google faced angry questions on Thursday from British lawmakers investigating its tax affairs over whether it had misled parliament in testimony last year, adding fuel to a debate on taxation that has risen to the top of Britain's political agenda.

Google's Northern Europe boss, Matt Brittin, was called back to testify to parliament's Public Accounts Committee after a Reuters investigation showed the company employed staff in sales roles in London, even though he had told the committee in November its British staff were not "selling" to UK clients.

Prominent parliamentarians have questioned Schmidt's continued status as a member of Cameron's Business Advisory Group given what some of them have classed as his company's "amoral" attitude towards paying tax.

The group meets quarterly to give Cameron high level advice on critical business and economic matters facing Britain.

(Reporting by Andrew Osborn and William James; Editing by Guy Faulconbridge)

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By Christiaan Hetzner and Rhys Jones

FRANKFURT/LONDON (Reuters) - Europe's ailing car market ended a streak of 18 straight months of falling sales, though a number of one-off factors suggested that a sustained recovery will be harder to achieve.

A pick-up in Germany and Spain in addition to continued robust demand in Britain delivered a 1.8 percent increase in new car registrations last month, to 1.08 million vehicles.

However, the figures published by automotive industry association ACEA on Friday were flattered by two extra sales days in many European markets after Easter holidays fell in March rather than April, with last year's weak April also helping the year-on-year comparison.

Demand for new cars in recession-hit Europe fell to a 17-year low last year as euro zone unemployment reached record highs, credit dried up and households focused on repaying debt.

Despite last month's upturn, the ACEA pointed out that it was still the third-lowest level of new registrations for the month of April.

"It's a bit like the 'dead cat bounce' because car sales have been so low for so long they may have reached their low point, but I'm wary about calling this a turning point because consumers in most of the euro zone remain under pressure," said Howard Archer, chief European economist at consultancy IHS.

"Germany is the best market to see future upticks because the fundamentals for consumers there, such as high employment and wage growth, are better than elsewhere."

VW UPLIFT

Monthly sales by Volkswagen , the world's third-largest carmaker, rose 7.2 percent in April, having grown at their slowest rate in more than three years a month earlier. GM's Opel brand, meanwhile, achieved a 2.1 percent gain.

Yet without a near-15 percent boom in Britain, which enjoyed its best April sales in five years, Europe's car market would have suffered a slight contraction last month.

For the first four months of 2013, volumes have declined 7 percent compared with the same period last year, with industry executives describing it as a challenging start to the year.

"We expect continued uncertainty through the summer season, especially as Germany heads towards September elections," said Allan Rushforth, European chief operating officer for Korea's Hyundai .

French and Italian mass-market brands continued to pay a high price for their heavy reliance on car buyers in southern Europe.

"Smaller, cheap cars at the bottom of the market are selling well, as are high-end luxury vehicles. But the middle of the market, served by the likes of Fiat, Renault and PSA (Peugeot Citroen), continues to be very soft and weak," said Peter Wells, head of the centre for auto industry research at Cardiff University in Wales.

"That is a worrying divergence because the mass market drives the industry's sales and it's hard to know what the natural size of the European car market is now."

Both of PSA's brands surrendered market share after Peugeot sales fell 7.5 percent and Citroen dropped nearly 13 percent. Renault managed to escape with only a 1.3 percent drop last month.

Fiat's eponymous brand notched a 4 percent drop, while sales for its sporty Alfa Romeo marque collapsed by a third and now counts fewer new car customers in its core European market through April than Japanese import Mitsubishi .

(Editing by Edwina Gibbs and David Goodman)

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