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* Says asset purchases should continue while FLS gatherspace
* "Glimmers of hope" that UK economy may be on the mend
* FLS should boost 2013 lending but banks may be too tough
* Voted for more QE in February, March
LONDON, April 9 (Reuters) - Britain's economy still needssupport from more central bank asset purchases, although thereare signs that growth should pick up this year after two yearsof stagnation, a Bank of England policymaker said.
Paul Fisher, the central bank's executive director formarkets, told Scotland's Herald newspaper that Funding forLending was improving conditions for borrowers, but that theeconomy still needed other help until that scheme got up to fullsteam.
Fisher and two others on the bank's nine-member MonetaryPolicy Committee voted for more quantitative easing via bondpurchases in February and March.
"We need some sort of background level of QE to see usthrough this period, particularly while FLS has its full impactfor the remainder of this year," Fisher said in an interviewpublished on Tuesday.
The central bank launched FLS last year to address theproblem of its asset purchases not easing lending conditions forsmaller businesses and households.
Fisher and two others on the MPC voted for 25 billion poundsof extra gilts purchases in February and March, on top of the375 billion pounds bought between March 2009 and October 2012.
Minutes of April's meeting, to be published next week, willshow whether he did so again.
Fisher was cautious about any benefits from morequantitative easing than what he had recently advocated.
"I don't know whether it would have a huge impact," he said.
"There are limits to what monetary policy can do. Nobody hasactually given us any new toys to play with in terms of tryingto promote the economy," he added, referring to a modest changein the central bank's remit last month.
Fisher said he was hopeful that contractions in constructionand North Sea oil output would stop this year, giving "glimmersof hope" that the economy was on the mend.
Banks expected a reasonably big expansion in lending butFisher - who is in charge of the FLS - was more doubtful.
"I am not quite as optimistic ... but I would expect lendingto go up," he said.
"The big banks are saying it has been a powerful influenceon their funding costs ... but they say they are struggling tofind businesses to whom they are willing to lend," he added. "Inpart this may be because their credit assessments are stillbeing too severe, that is a matter to look into."
