New U.S. claims for unemployment benefits rose more than expected last week as harsh weather conditions in some parts of the country kept workers at home and caused a backlog in the processing of claims, a government report showed on Thursday.

New orders for U.S. manufactured goods fell unexpectedly by 2.5 percent in December, a separate report showed.

KEY POINTS: * Initial claims for state unemployment benefits jumped 51,000 to a seasonally adjusted 454,000, the highest since late October, the Labor Department said. * That was the largest weekly increase since September 2005. * Economists polled by Reuters had expected claims to be little changed at 405,000. * The prior week's figure was revised slightly down to 403,000 from the previously reported 404,000. * When volatile transportation orders were stripped out, durable goods orders rose 0.5 percent, the Commerce Department said, though this was a smaller rise than expected.

COMMENTS:

NICK KALIVAS, VICE PRESIDENT OF FINANCIAL RESEARCH, MF GLOBAL RESEARCH, CHICAGO:

The combination of the Martin Luther King holiday and the weather issues we had has (disrupted) the seasonal factors. The latest claims number is so high. It has cooled the recent labor optimism. On the margin, it has dampened the equity market, and put a bid into the Treasuries market. I do think the context that's in people are not going to read too much into it.

JOE MANIMBO, CURRENCY TRADER, TRAVELEX GLOBAL BUSINESS PAYMENTS, WASHINGTON:

At first glance, it's certainly disheartening coming a day after the Fed meeting, at which the Fed maintained its asset purchase plan. But if you look closer at the details, the big jump in jobless claims was partly linked to seasonal factors. That can help reduce some of the negative impact of that headline number. As a result, we've seen more of a muted impact on the dollar.

DURABLE GOODS: That was discouraging and that basically helps to justify the Fed's decision to maintain its asset purchase program.

BORIS SCHLOSSBERG, DIRECTOR OF RESEARCH, GFT FOREX, NEW YORK:

This jobless claims number was horrid, there's no sugar-coating it. The only thing is the winter weather patterns in the northeast played some part in it. But if we can get back below 450,000 in claims, which we tended to be below since November, I think the market will realize that the U.S. economy is improving. That said, the yield differentials are working against the dollar. Until the benchmark 10-year goes above 3.5 percent, there's little incentive to buy the dollar against the yen or euro. The market needs to feel like there's some return beyond U.S. dollar-denominated assets. That's been the big anchor holding back dollar rallies.

ZACH PANDL, U.S. ECONOMIST, NOMURA SECURITIES, NEW YORK:

Obviously a little bit of noise here. I think the message is, looking through some of the week to week volatility, our view is that the labor market is clearly improving. You're seeing better tax receipts better confidence about the job market.

We don't think this one week setback means too much for the broader outlook.

Claims have been coming down gradually, but if you look at the four-week moving average, the pace of improvement may be slowing a little bit over the last week--the last couple of weeks. It leaves open the question of how good the jobs report is going to be for January after a disappointing December result.

JEOFF HALL, ECONOMIST AT IFR ECONOMICS, A UNIT OF THOMSON REUTERS:

Durable goods shipments rose by 1.4 percent in December following a 0.5 percent rise in November, so the contribution to GDP is still positive.

PETER TUZ, PRESIDENT, CHASE INVESTMENT COUNSEL, CHARLOTTESVILLE, VIRGINIA:

Higher than the world expected, but I'll buy that it can be blamed on the weather. But it does show that the recovery is growing in fits and starts. The market was looking for an improving trend, but we didn't get it. We're in a recovery but it isn't smooth or without its setbacks.

OMER ESINER, CHIEF MARKET ANALYST, COMMONWEALTH FOREIGN EXCHANGE, WASHINGTON:

In the context of an already weaker dollar, jobless claims add to the heavier tone though jobless is probably distorted by the weather.

MARKET REACTION: STOCKS: U.S. stock index futures turn negative after the data. BONDS: U.S. Treasury bond prices trim losses. FOREX: The euro rises versus dollar. Dollar pares gains versus the yen.

Fall