ECB leaves rates at 4 pct

FRANKFURT (Reuters) - The European Central Bank kept interest rates at 4.0 percent on Thursday, in line with expectations that high inflation plus a murky economic outlook would prompt the Governing Council to stay on hold for the 10th month in a row.

Economists are now awaiting ECB President Jean-Claude Trichet's regular news conference at 1230 GMT (1:30 p.m. BST), when he will explain the reasons for the decision.

Euro zone inflation hit a fresh record high of 3.5 percent in March, well above the ECB's target of just below 2 percent.

But growth prospects are uncertain, with business activity slowing in response to months of credit market turmoil and the U.S. economic malaise.

The ECB also held its marginal lending rate at 5.0 percent and its deposit rate at 3.0 percent.

(Reporting by David Milliken; editing by David Stamp)