WRAPUP 3-U.S. confidence hits 16-mo high; home prices soft

* U.S. consumer confidence at highest since Sept 2008

* U.S house prices unexpectedly slip in November

* IMF raises global growth forecast
(Adds details on Fed policy meeting)

By John Parry

NEW YORK, Jan 26 (BestGrowthStock) – U.S. consumer confidence in
January hit its highest level in nearly a year and a half, but
a closely watched housing index showed an unexpected decline in
November home prices, giving a mixed picture of the economic
recovery.

The Conference Board, an industry group, reported on
Tuesday that consumer confidence rose for the third straight
month in January, driven by improved economic conditions.

Its index of consumer attitudes rose to 55.9 in January,
the highest reading since September 2008 and up from an
upwardly revised 53.6 in December. The index topped the median
forecast for a reading of 53.5 from analysts polled by Reuters.
For details, see [ID:nN26357538]

“This really bodes well for consumer spending. It shows we
are in a modest recovery and we will likely maintain a modest
recovery for the next few quarters,” said Ward McCarthy, chief
financial economist with Jefferies & Co in New York.

The confidence data helped drive U.S. stock indices higher
in midday trade, while safe-haven Treasury debt prices pared
gains and the dollar was steady.

A decline in job losses in recent months and a resurgent
stock market have helped improve consumers’ mood as the U.S.
economy returned to growth last year after the worst economic
slump in decades.

Yet concerns remain about the sustainability of the
recovery after the most severe housing market downturn and
highest unemployment in more than a quarter century.

With this likely in mind, the Federal Reserve’s
policy-setting Federal Open Market Committee was meeting on
Tuesday and Wednesday to weigh the economic outlook.

Most market analysts do not expect any interest rate move
at the conclusion of the meeting, nor any change to the
language indicating that the federal funds target rate will
remain near zero for an extended period.

Despite some signs of improvement, the outlook for global
growth remains cloudy.

The International Monetary Fund on Tuesday sharply raised
its forecast for global growth to 3.9 percent from an October
estimate of 3.1 percent.

However, China’s clampdown on bank lending has raised some
concerns in financial markets about global economic growth
prospects.

In the United States, the closely watched Standard &
Poor’s/Case-Shiller indexes released on Tuesday showed that
home prices slipped in November.[ID:nNYS007725].

The S&P composite index of home prices in 20 metropolitan
areas edged down 0.2 percent in November and registered a 5.3
percent annual drop. A Reuters survey had forecast a 0.1
percent November rise.

October prices were revised to show a 0.1 percent dip,
after originally having been reported as unchanged.

Anna Piretti, senior U.S. economist at BNP Paribas in New
York, noted that housing sales were affected by the originally
scheduled Nov. 30 expiration of the government’s tax credit for
first-time buyers. Since then, the tax credit has been expanded
and extended until June.

“Overall we had positive demand conditions and a market
that was very well supported by the government program,”
Piretti said. “As soon as that government program showed signs
of ending, buyers pulled back.

“The demand is not self-sustaining,” she added. “I think
overall the risks are still slightly to the downside.”

Yet a home price index from the U.S. Federal Housing
Finance Agency showed that home prices rose 0.7 percent in
November from October.

The Conference Board survey showed consumers’ expectations
at their highest in more than two years. The expectations index
rose to 76.5 in January, the highest since October 2007, from
December’s upwardly revised 75.9.
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For graphics on U.S. home prices in November, see
http://link.reuters.com/rus75h
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Investing Analysis

(Reporting by Lynn Adler, Chris Reese and Tom Ryan in New York
and Lucia Mutikani in Washington; Writing by John Parry;
Editing by Leslie Adler and Dan Grebler)

WRAPUP 3-U.S. confidence hits 16-mo high; home prices soft