U.S. imports and exports fell in February, prompting analysts to cut again their forecasts for U.S. economic growth in early 2011 and showing signs of a slowing in the global recovery.

The trade gap totaled $45.8 billion and was down 2.6 percent from January as imports fell faster than exports, even as oil prices hit their highest level since October 2008, the Commerce Department said on Tuesday.

The impact of the oil price jump was tempered by a drop in the volume of oil imports to the lowest in 12 years. A separate Labor Department report showed petroleum prices surging 10.5 percent in March, suggesting bigger trade shortfalls ahead.

The narrowing in the trade deficit in February is a brief respite before the impact of the more recent surge in oil prices pushes the deficit sharply wider, said Paul Dales, senior U.S. economist with Capital Economics in Toronto.

In any case, it looks like net trade was a drag on real GDP (gross domestic product) growth in the first quarter, adding to other evidence the economy has slowed, Dales said.

Analysts at RBS in Stamford, Connecticut agreed, trimming their estimate of first-quarter growth to 1.7 percent on an annualized basis, from 2.0 percent previously.

Both imports and exports fell in February, indicating a slackening of demand at home and abroad that month.

The trade report shows there are headwinds for the global economy ... There are lot of geopolitical uncertainties weighing on trade, said Michelle Meyer, senior economist at Bank of America Merrill Lynch in New York.

The International Monetary Fund downgraded its outlook for U.S. growth this year to 2.8 percent in its World Economic Outlook released on Monday. It had forecast 3.0 percent growth in its January report.

The U.S. economy grew an annualized 3.1 percent in the fourth quarter of last year.

U.S. exports, after rising in each of the previous five months, fell 1.4 percent in February to $165.1 billion.

Imports, which like U.S. exports have roared back from the depths of the global financial crisis in 2008 and 2009, fell a larger 1.7 percent in February to $210.9 billion.

OIL EFFECT

While recent U.S. economic data has indicated some slowing in the nation's recovery at the start of this year, there are signs business activity may be picking up.

Klaus Kleinfeld, chairman and chief executive at aluminum giant Alcoa Inc, told Wall Street analysts on Monday the company still expected global aluminum demand to grow by 12 percent this year with some industrial sectors, such as heavy trucks, growing even more.

Oil remains a wildcard.

The average price for imported oil rose for the fifth straight month in February to $87.17 per barrel.

A Labor Department report showed imported petroleum prices jumped 10.5 percent in March, the most since June 2009, after rising 4.0 percent in February. Overall, import prices rose 2.7 percent in March.

A sustained rise in oil prices could test the dominant view within the U.S. Federal Reserve that inflation risks are not great enough yet to warrant tightening monetary policy.

But for now, the data shows higher commodity prices are more a threat to economic growth than a driver of inflation, Dales said.

A U.S. government report due out on Friday is expected to show overall consumer prices rose a relatively steep 0.5 percent in March for the second month in row, while core prices excluding food and energy rose 0.2 percent.

The closely watched U.S. trade deficit with China shrank 19 percent in February to $18.8 billion, as U.S. imports from that country fell and U.S. exports to the Asian giant rose.

Chinese officials could point to the smaller trade gap in talks this week with the United States and other Group of 20 leading developed and developing nations as a sign its economy was becoming less reliant on exports.

However, the U.S. trade deficit with China was still 21 percent higher for the first two months of the year.

China's own trade figures released earlier this week showed that in the first quarter of 2011 it ran an overall trade deficit for the first time since 2004.

(Additional reporting by Lucia Mutikani in Washington and Richard Leong in New York; Editing by Andrea Ricci)

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