FRANKFURT (MNI) - European Central Bank President Jean-Claude Trichet Thursday said the ECB expects the euro area economy to grow at a moderate pace in 2010, and he called on the region's governments to reduce their budget deficits.

In the text of a speech prepared for delivery at the Annual General Assembly of the Manufacturers' Association of Israel in Tel Aviv, Trichet repeated the ECB's time-honored refrain that ensuring price stability is the best contribution central banks can make to the recovery and to ensure a stable economic environment.

"We expect the euro area economy to grow at a moderate pace in 2010," Trichet said. "I should add, though, that the recovery process is likely to be uneven, and the outlook remains subject to high uncertainty."

"The upside and downside risks are broadly balanced," the ECB chief added, sticking closely to the assessment issued in his introductory statement at last Thursday's press conference.

Amid ongoing concerns about the fiscal crisis in Greece, Trichet stressed that "budget deficits in euro area countries must be reduced in a timely fashion to maintain confidence in public finances."

He observed that the crisis has highlighted "the need for all policymakers to contribute to financial, macroeconomic and price stability over the medium and long term."

For monetary policymakers in particular this means ensuring price stability, Trichet argued.

"By solidly anchoring expectations of price stability over the medium term, central banks are consolidating confidence and contributing to a sustainable recovery," he said. "I am convinced that a clear commitment to price stability by independent central banks has beneficial effects in countries and regions all over the world."

The ECB's mandate of ensuring price stability and its independence have been "crucial" to its ability to anchor inflation expectations, he argued.

Trichet said the "global financial system has to be made more resilient," and he called for "very close international cooperation and solutions at the global level."

"There is an overwhelming need to implement global reforms in a coordinated fashion and along the same concepts, in order to preserve a global level playing field that would be solid and resilient," he asserted.

To avoid "protectionism and disruptive market movements related to global imbalances will require a high degree of international cooperation among authorities in advanced and emerging market economies," Trichet said.