European Union flags are reflected in a window at the headquarters of the European Central Bank (ECB) in Frankfurt, Germany, April 21, 2016. REUTERS/Ralph Orlowski

By Yoruk Bahceli and Stefano Rebaudo

LONDON/MILAN (Reuters) -The European Central Bank is all but certain to keep rates on hold again on Thursday as traders waver on whether it will resume easing next year.

Renewed U.S.-China trade tensions have prompted caution in markets but policymakers have not seen enough data since September to move the dial, economists reckon.

Here are five key questions for markets:

1/ What will the ECB do this week?

Hold rates at 2% for the third meeting in a row.

Not much has changed since September, when policymakers said the bloc's economy remained in a "good place". They are yet to see the full impact of U.S. tariffs and the euro, whose 12% rise this year risks driving inflation down, has dropped.

"This is just an interim meeting. The more significant one will be in mid-December," said UBS chief European economist Reinhard Cluse.

2/ Inflation is back above target. Is the ECB worried?

No. Euro zone inflation rose to 2.2% in September, above target for the first time since April, as services prices rose and energy cost declines slowed.

That was in line with expectations and the ECB sees inflation dropping to 1.7% next year and staying below target through mid-2027.

Policymakers broadly see inflation risks as balanced - but more seem worried about the risk of weaker rather than stronger inflation, ECB September meeting minutes suggested.

"Near-term inflation risks are to the downside, due to the stronger euro and the disinflationary impulse from Chinese exports," said Paul Hollingsworth, head of developed market economics at BNP Paribas, referring to the risk of China dumping surplus exports into Europe.

Upside risks on the back of German stimulus are more medium term, he added.

3/ Why are traders again betting on a rate cut next year?

There's more caution after U.S. President Donald Trump unveiled additional levies on Chinese imports, escalating trade tensions which had eased.

Money markets now price in around a 50% chance of another ECB rate cut next year, but data suggesting the economy is gaining momentum in the fourth quarter and rising oil prices have lowered that from around 80% last week.

In September, a hawkish-sounding ECB had led markets to price out a 2026 rate cut.

4/ Economic uncertainty remains high. What does that mean for ECB policy?

It underscores why policymakers have not closed the door on further cuts.

ECB chief economist Philip Lane has said downside risks would strengthen the case for "slightly lower" rates and upside factors for staying on hold. He has also said euro zone banks may come under pressure if dollar funding dries up.

The impact of U.S. tariffs and the potential for trade tensions to escalate remain the main downside risks, economists said.

The latest U.S.-China developments add to the uncertainty surrounding the EU's 15% tariff arrangement, said Morgan Stanley's chief Europe economist Jens Eisenschmidt.

Further euro strength and German stimulus kicking in slower than expected could also prompt another cut, UBS's Cluse said.

The ECB also says AI-driven market valuations raise the risks of an abrupt repricing in global markets that could hurt the euro zone.

France's budget uncertainty is unlikely to sway the ECB's thinking, but the Socialists on Friday put a government collapse back on the table.

5/ Where does the ECB stand in the debate around using frozen Russian assets to help Ukraine?

It has no official say, but the ECB does not want the euro's credibility to be damaged at a time when it sees an opportunity to boost the currency's global clout.

Many EU governments want to invest Russian cash stuck at Belgium's Euroclear repository from matured Russian bond holdings into zero-coupon bonds issued by the bloc, then use the proceeds to lend to Ukraine.

Russia would retain its claim over the assets, avoiding an outright confiscation - the most euro-negative scenario. Russia has said it would deliver a "painful response" to any such move.

Lagarde has said the EU must follow international law in the process and would prefer all countries holding Russian assets and cash to similarly lend to Ukraine.

But the idea was put on hold on Thursday and will be revisited in December.

Ultimately, factors such as defence capabilities and the limited depth of euro zone capital markets play a more decisive role in the euro's position as a reserve currency, Morgan Stanley's Eisenschmidt said.

(Reporting by Yoruk Bahceli in London and Stefano Rebaudo in Milan, additional reporting by Balazs Koranyi in Frankfurt; Editing by Dhara Ranasinghe and Alison Williams)