Sales at U.S. retailers rose slightly less than expected in March as rising gasoline prices pulled spending away from other segments and receipts from auto dealerships fell, a government report showed, pointing to slower consumer spending in the first quarter.

KEY POINTS:

* Total retail sales increased 0.4 percent, a ninth straight month of gains, the Commerce Department said on Wednesday. * March's reading was the weakest since June when sales fell 0.3 percent. February sales were revised up to a 1.1 percent gain from a previously reported 1.0 percent rise. * Economists polled by Reuters had expected retail sales to increase 0.5 percent last month.

COMMENTS:

NICHOLAS COLAS, CHIEF MARKET STRATEGIST AT THE CONVERGEX GROUP IN NEW YORK

The number looks a touch better excluding autos, that's heartening. Autos are a little weaker but overall this is a good surprise considering we're all concerned about the price of oil. It does look like the consumer is hanging in there in the face of higher energy prices. That they wouldn't was everyone's concern.

So far in earnings season we've had essentially one good report and one bad one. Yesterday the market didn't respond well to Alcoa but it looks like we're going to be stronger on JPMorgan.

CAMILLA SUTTON, SENIOR CURRENCY STRATEGIST, SCOTIA CAPITAL, TORONTO

The retail sales report had upward revisions to the prior month's data, so that's positive. I think sales ex-autos is also positive, so overall, the report's not too bad. Yesterday, it looked like we were rolling over in a whole host of assets, including currencies, but momentum has been restored today, so I think that means renewed weakness for the U.S. dollar. Beyond the data, I think the focus will be on the U.S. deficit, with Obama speaking this afternoon and yesterday's IMF report on the U.S. deficit.

TOM PORCELLI, CHIEF U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK

It was a bit of disappointment in March, but you have significant upward revisions in January and February. It looks like we are running at 2.5 percent clip in personal consumption in the first quarter, which is a pretty solid number. It doesn't look like we are going to have to change that call. We are still seeing decent job growth.

As for market reactions, there are so many cross-currents right now. It is hard to make a big deal out of numbers that are not much out of consensus.

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

Retail sales grew by just 0.4% in March, resulting in a growth rate of 2.3 percent for Q1 from the last quarter. With yesterday's release of a trade balance not improving as much as anticipated (as well as other indicators sluggish in growth), economists have begun to lower their estimates for Q1 GDP, and today's report is not helping the situation.

MARKET REACTION:

STOCKS: U.S. stock index futures hold strong gains.

BONDS: U.S. bond prices add to losses.

FOREX: The dollar trims losses slightly versus euro.

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