The pace of private-sector U.S. job losses slowed dramatically last month, while future planned layoffs also declined, and the hard-hit housing sector showed signs of improvement last week.

Wednesday's reports are the latest indications that the U.S. economy is pulling out of freefall and may even be preparing to stop its descent, adding to hopes that have fueled a stock market rally over the last two months.

In housing, the original epicenter of the economic crisis, U.S. mortgage applications rose last week, even as interest rates jumped to their highest levels since mid-March.

The total number of U.S. private-sector job losses were much less than expected in April, hitting its lowest level since November last year, according to a report by ADP Employer Services.

Meanwhile, planned layoffs at U.S. firms fell for a third consecutive month in April, hitting their lowest level since last October, a report by global outplacement consultancy Challenger, Gray & Christmas, Inc said.

The mentality of economic improvement is taking hold, said John Spinello, chief fixed income technical strategist at Jefferies & Co in New York.

The data came ahead of Friday's more comprehensive non-farm payrolls report by the government.

Economists expect Friday's payrolls report to show the economy shed 620,000 jobs in April and the unemployment rate jumped to 8.9 percent from 8.5 percent.

On Wall Street, stocks were mixed after initially jumping nearly 1 percent, while U.S. Treasuries bounced off lows.

LESS BAD

ADP said private employers cut 491,000 jobs in April versus a revised 708,000 lost in March, originally reported as a loss of 742,000 jobs.

Economists expected 650,000 private-sector job cuts in April, according to a Reuters poll.

Though the report bolstered hopes the worst is over for the recession-bound U.S. economy, many analysts advised caution in interpreting the figures.

One month's number does not a trend make, Joel Prakken, chairman of Macroeconomic Advisers, told a teleconference for journalists.

However, Prakken, whose firm jointly developed the ADP Employer Services report, said the coming months' data on job losses should resemble April's improved figures rather than the steeper cuts seen in recent months.

Maybe improving gradually, but still fairly significant negative numbers, and I don't expect to see employment start rising really until sometime toward the end of the year, said Prakken.

He added that he expected modest but below-trend economic growth in the second half of the year.

Planned job cuts announced by U.S. employers totaled 132,590 in April, a 12 percent drop from 150,411 layoffs recorded the previous month, according to the Challenger report.

This was the lowest monthly total since 112,884 cuts were announced last October, but still up 47 percent from the 90,015 job cuts announced in the same month of 2008.

LOAN DEMAND UP

Demand for home purchase loans, an indicator of home sales, far outweighed that for refinancing. The increase may help gauge how the hard-hit U.S. housing market is faring this spring, the peak home-buying season.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended May 1 increased 2.0 percent to 979.7.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 4.79 percent, up 0.17 percentage point from the previous week, when it nearly matched the all-time low of 4.61 percent set in the week ended March 27. The survey has been conducted weekly since 1990.

It was the highest since 4.89 percent in the week ended March 13, though well below year-ago levels of 5.91 percent.

(Additional reporting by Julie Haviv and Richard Leong; editing by Jeffrey Benkoe)

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