New U.S. claims for unemployment benefits unexpectedly rose last week, bouncing back above the key 400,000 level, a government report showed on Thursday.

U.S. core producer prices rose slightly faster than expected in March and the increase from a year ago was the largest since August 2009, pointing to a broadening in pipeline inflation pressures.

KEY POINTS:

* Initial claims for state unemployment benefits rose 27,000 to a seasonally adjusted 412,000, the Labor Department said. * Economists polled by Reuters had forecast claims slipping to 380,000. The prior week's figure was revised up to 385,000 from the previously reported 382,000. * The four-week moving average of unemployment claims -- a better measure of underlying trends - climbed 5,500 to 395,750.

* The Labor Department said its seasonally adjusted index for prices paid at the farm and factory gate - excluding volatile food and energy costs -- rose 0.3 percent after gaining 0.2 percent in February. * Economists had expected core PPI to rise 0.2 percent in March.

COMMENTS:

STEPHEN STANLEY, CHIEF ECONOMIST, PIERPONT SECURITIES, STAMFORD, CONNECTICUT

JOBLESS CLAIMS: The Labor Department is attributing the rise to the turn in the calendar quarter but that is something that it should have accounted for.

You just have a wait-and-see whether the weekly claims figure stays above 400,000. If you see that, then it would be worrisome.

PPI: The headline was a little below consensus. The core is pretty much line. We are continuing to see a rise in energy prices and we will likely see this continue. There is not a lot you can take away from the core PPI for the core CPI. We just have to wait until tomorrow.

If there were a 0.2 percent year-over-year increase in the core CPI, it would be away from central forecasts implicit in the Fed's dovish rhetoric.

BRIAN LAZORISHAK, PORTFOLIO MANAGER AT CHASE INVESTMENT COUNSEL IN CHARLOTTESVILLE, VIRGINIA

Claims were certainly higher than what people were looking for. We've been trending under 400,000 lately, so this seems like a negative. But at the same time, I'd view it as one data point, and a data point that is volatile from week to week. However, one of the positives we've had in the past year is continued, albeit slow, improvement in the jobs picture, so any setback there will be discouraging.

The initial focus today will be more on earnings and the worldwide growth and inflation issues, but this number could add some negative bias and create additional selling pressure.

VIMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS:

The number of people initially filing for unemployment benefits rose to 412,000 in the week ending April 9 -- reflecting an increase of 27k from the week prior.

Now resembling a level closer to the beginning of the year when seasonal volatility impaired readings (January had an average of 427k, today's number is not what the market was expecting and sure to initiate a witch hunt for the culprit --likely commentary surrounding higher energy prices forcing businesses toward layoffs.

A more subtle explanation is the fact seasonals (expecting a 17 percent rise and ended up with 25 percent) underestimated the effect of adjusting to a new quarter which affects filing behavior. For starters, claimants will delay filing in hopes of receiving better benefits referencing a more recent, higher paycheck -- in accordance with local guidelines.

Today's report, encompassing the first full week of April, is more associated with this behavior than commodity prices.

MARKET REACTION:

STOCKS: U.S. stock index futures add to losses.

BONDS: U.S. bond prices extend gains.

FOREX: The dollar extends losses versus the yen.

Unemployment