* ECB launches long-term TLTRO loan scheme for banks
* Banks take 82.6 billion euros, well below poll forecast
* Banks have second chance to bid for loans in December
* Markets see pressure on ECB to launch QE if lending flops (In paragraph 16, please read 12.5 billion not 12.3 billion)
By Eva Taylor and John O'Donnell
FRANKFURT, Sept 18 (Reuters) - The European Central Bank saw far less demand than expected on Thursday for its new four-year loans to banks, raising doubts about a stimulus package it hopes will stave off deflation and revive the euro zone economy.
The launch of the scheme, a central plank of the ECB's efforts to coax reluctant banks to lend, saw the euro zone's central bank hand out 82.6 billion euros of 400 billion euros ($515.16 billion) on offer to 255 banks.
That was well below the 133 billion euros forecast by a Reuters poll of 20 money market traders. Banks will get a second chance on December 11 to apply for the cash - granted at ultra-low interest rates on condition they lend it on to businesses - when the poll predicted take-up of 200 billion euros.
Berenberg Bank chief economist Holger Schmieding called the low demand "a disappointing result for the ECB" that cast doubt on the bank's hopes of injecting 400 billion euros into the economy through this scheme.
"Simply offering more liquidity at more generous terms to banks awash in cash will not make a huge difference to the outlook for growth and inflation," he said.
The key problems were weak demand for credit in the euro zone, exacerbated by economic conflict with Russia over Ukraine and uncertainty in the banking sector ahead of the publication next month of an ECB health check on major banks.
The success of the so-called TLTRO cheap credit project is important for the euro zone, whose 18 countries are grappling with record-high unemployment and fading economic growth.
Previous rounds of cheap ECB loans for banks and borrowing costs close to zero have done little to boost lending to companies, with much of the money instead spent on government bonds. Critics fear a similar fate for the new scheme.
Market reaction was muted. The euro rose briefly against the dollar, while benchmark German government bond futures dipped.
Traders said the low take-up raised expectations the ECB may eventually take more radical monetary stimulus measures, such as printing money to buy securities - quantitative easing, or QE - although there is strong resistance in Germany to such a move.
Some banks were reluctant to participate in Thursday's round, possibly for fear that it could single them out as struggling just weeks before the results of an ECB-led asset quality review (AQR) and stress tests.
"The European financial sector continues to be weak," said Karel Lannoo of Brussels think tank the Centre for European Policy Studies. "There may be a stigma because the markets are waiting for the AQR in a few weeks."
The TLTRO programme is aimed particularly at banks in the euro zone's periphery, where credit is scarce and borrowing costs far higher than in core northern economies following a debt crisis in which five countries required EU/IMF bailouts and heavily indebted Italy came near the brink.
Ten Italian banks took a combined 23 billion euros or roughly 28 percent of Thursday's tender, data compiled by Reuters showed.
UniCredit, Italy's largest bank by assets, said it took 7.75 billion euros of the new funds, the maximum allotted to it in Italy, but did not draw funds in Austria and Germany, where it has subsidiaries.
Intesa Sanpaolo, the country's biggest retail bank, said it took 4 billion euros of the cheap credit and expected to claim the rest of its 12.5 billion allotment in December. Troubled lender Monte dei Paschi di Siena took 3 billion.
Spain's BBVA, Bankia, Banco Popular and Caixabank <CABK.MC. took a total 11.1 billion euros between them. Spanish banks are expected to borrow more than 35 billion euros at the two auctions, according to Reuters data.
Economists said the low take-up would put more pressure on other stimulus measures announced by ECB President Mario Draghi this month, including plans to buy asset-backed securities and covered bonds, to expand the central bank's balance sheet.
"It ... raises expectations for the purchase programme of securitised debt and it could fuel speculation that the ECB may have to buy other assets on top, such as government bonds," said Johannes Mayr, an economist with BayernLB.
Draghi has also urged euro zone governments with fiscal room to increase investment spending and others to implement structural reforms to revive anaemic growth.
The ECB tendered the four-year loans to banks at a fixed rate of 0.15 percent, a slight premium to the regular price of funding. If banks start lending more to the "real economy", they can take further cheap ECB loans running through to mid-2016.
"We would warn about drawing too strong conclusions from the September round," said ABN Amro analyst Nick Kounis, who expects a total take up of 350 billion euros this year.
Another reason for banks holding fire is to find out more details - due in October - of the programme to buy asset-backed securities and covered bonds.
They may also choose to hold on to existing crisis loans from an earlier ECB programme for longer.
The ECB flooded the market with cheap three-year loans at the height of the debt crisis in late 2011 and early 2012. They expire early next year and many banks are expected to use the new four-year loans to pay back such debt.
Lannoo said he was sceptical that the new initiative would lead to more lending to the smaller businesses that are the euro zone's economic backbone, as previous long-term loans to banks had failed to do so.
"Has this helped to improve credit to the private sector? Not much," he said. "It has not reduced the divide between north and south."
Figures on Friday showing how much of those crisis loans banks will repay next week and the result of next week's main refinancing operation may give an indication of how much will be rolled over into the new operations.
Nomura, which forecasts total take-up this year of between 250 billion and 300 billion euros, said that Italian and Spanish banks would make full use of their four-year loan allowances, which it puts at 75 billion and 54 billion euros, respectively. (1 US dollar = 0.7765 euro) (Additional reporting by John O'Donnell in Frankfurt, Marius Zaharia, Aimee Donnellan and Emelia Sithole-Matarise in London, Valentina Za and Danilo Massoni in Milan; Editing by Catherine Evans and Paul Taylor)