U.S. consumer confidence rose in May to a two-year high as concerns about the labor market eased, according to a private sector report released on Tuesday.

KEY POINTS: * The Conference Board, an industry group, said its index of consumer attitudes rose to 63.3 in May, the best level since March 2008, from a downwardly revised 57.7 in April. * The median of forecasts from analysts polled by Reuters was for a reading of 59.0 for May. The results showed Americans were little affected by the sharp sell-off in U.S. stock markets early in the month. The Dow Jones Industrial Average on May 6 briefly fell nearly 1,000 points -- its biggest intraday point drop ever. The cutoff date for the Conference Board's May survey was May 18. * The expectations index rose to 85.3 in May from 77.4, the best level since August 2007. The present situation index increased to 30.2 from 28.2, the highest since December 2008.

COMMENTS:

CARY LEAHEY, ECONOMIST, DECISION ECONOMICS, NEW YORK:

People would have attributed a decline in consumer confidence to the drop in the stock market and the turmoil in the EU, but low and behold the index jumped and made another smart improvement, demonstrating the influence of the perceived improvement in the labor market on this index.

The labor market is improving, not only in government figures on payrolls and households, but in the stories people read in the newspaper and on the web. People can't ignore the stories about the more positive job market.

DAVID DIETZE, CHIEF INVESTMENT STRATEGIST, POINT VIEW FINANCIAL SERVICES, SUMMIT, NEW JERSEY

It does look like consumer confidence is the one bright spot in the waterfall of negative news generally for the economy.

It was kind of refreshing if not a relief to see consumer confidence numbers came in better than expected. That was surprising because often in my experience consumer confidence tends to track the NASDAQ and of course we've entered correction territory.

I think what is trumping this latest correction is continued better-than-expected activity in the jobs market.

If anything it takes a little bit of luster away from Treasuries.

PETER BOOCKVAR, EQUITY STRATEGIST, MILLER TABAK + CO:

Consumer confidence was better than expected, about 5 points above estimates. It's at the highest since March 2008 and could in part be due to the slowly improving jobs market as those that said jobs were 'hard to get' fell 1.2 points to the lowest since Jan 2009. Those that said jobs were 'plentiful' fell a touch though.

HOWARD SIMONS, STRATEGIST, BIANCO RESEARCH, CHICAGO

I wouldn't get too excited about this.

We're probably better off than we've been over the past two years, but where are we going from here?

How long can interest rates stay low, what would happen if bank lending picked up and home prices fell and inflationary pressures started to increase and so on?

The true test will be when those begin to change.

CARL BIRKELBACH, CHAIRMAN AND CEO, BIRKELBACH INVESTMENT SECURITIES, CHICAGO:

This was before the market started dropping, and I don't think anyone is paying attention to it because of what the market is doing now. We're in a crisis mode. Confidence was strong for a while, but it will start to fade. There are going to be some disappointments going forward.

TOM SIMONS, MONEY MARKET ECONOMIST, JEFFERIES & CO., NEW YORK

It appears that consumers are focusing on the improvement

in the labor market as an indication that things are getting better. Apparently they're not paying too much attention to what's going on in Europe...Given what's going on, the fact that confidence is continuing to improve shows that the U.S. consumer is very provincial and not sort of globally minded as to how they think the developments in Europe will affect corporations in the U.S. and their ability to hire workers. You would figure that with such a crisis going on consumers would be more nervous but that's not really weighing on their sentiment. This data is very timely.

Improvement in the labor market's solid, though it's painfully slow. Overall, I would say it's a pretty good number.

MARKET REACTION: STOCKS: U.S. stock indexes held losses. BONDS: U.S. Treasury debt prices pared gains. DOLLAR: U.S. dollar fell against the euro, rose against the yen.

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