* Chile economy seen gradually slowing
* Economy seen growing between 4 and 5 percent in 2012
* Government monitoring liquidity
* Credit conditions, liquidity still normal, says Fin Min (Adds finance minister's comments)
By Anthony Esposito and Alexandra Ulmer
SANTIAGO, June 5 (Reuters) - Chile's economic growth eased in April from March, the central bank said on Tuesday, reinforcing expectations that it will keep interest rates on hold in coming months.
The euro zone's festering debt crisis, moderating growth in China and a sputtering recovery in the United States are weighing on Chile's small, export-dependent economy. The central bank sees growth slowing to between 4 and 5 percent this year, slowing from last year's 6 percent growth.
The IMACEC economic activity index grew a seasonally adjusted 0.5 percent in April from March, slowing its pace from a revised 0.7 percent increase in March. Analysts polled by Reuters had expected the pace of growth to slow.
"This economy keeps growing, we've started the first four months of the year in good standing ... But we also see signs of deceleration ..., which is expected," Finance Minister Felipe Larrain told reporters.
"We know that we have a very complex situation abroad, particularly in Europe, but in other markets too," said Larrain.
Year-over-year, the IMACEC rose 4.8 percent in April, coming in a whisker below market expectations for 4.9 percent growth and well below a revised 6.2 percent expansion in April 2011 from the previous year.
According to Larrain, the retail sector, double-digit growth in construction, a recovery in the key mining sector, and industry buoyed the IMACEC.
"Basically the diagnosis of the economy hasn't changed," said Banco Penta chief economist Matias Madrid. "It's in a process of deceleration, explained in part by slowing growth in developed nations and some emerging nations.
"We expect this to continue and to near a rate of growth of 4 percent this year," he added. "We see interest rates on hold for the rest of the year, and there is even a risk they could be cut if the situation abroad worsens."
Chile's economy has been bracing for a slowdown in global demand, especially from China, its top trade partner and No. 1 copper consumer.
Traders no longer expect the Chilean central bank to raise its key interest rate by year-end, according to the bank's latest fortnightly poll. They now expect the rate to remain steady at its current 5.0 percent in December and into mid-2013.
"Firm domestic demand growth against a backdrop of a tight labor market - full employment - is likely to keep the central bank from adopting an explicit easing bias given the deteriorating external backdrop and decline in copper prices," Goldman Sachs analyst Alberto Ramos said in a note to investors.
The economy of Chile, the world's No. 1 copper producer, should grow by 4.0 percent or more this year despite financial turbulence in Europe, and the government is ready to activate an economic contingency plan if liquidity is squeezed, President Sebastian Pinera told the Reuters Latin America Investment Summit on Friday.
Larrain said that credit conditions and liquidity were normal despite financial turbulence emanating from Europe and that it wasn't yet necessary to implement the contingency plan.
The monthly IMACEC data, which the central bank calculates in seasonally adjusted terms, measures more than 90 percent of the components comprising Chile's gross domestic product, which is published quarterly. (Reporting by Santiago Newsroom; Editing by Simon Gardner and James Dalgleish)