The trade deficit hit its widest point in 15 months in March as a broadening economic recovery boosted demand for foreign goods, with a rise in exports and imports seen as a sign of growing global demand.

Both exports and imports climbed to their highest levels since October 2008, according to the report from the Commerce Department on Wednesday.

It's an encouraging sign that growth in trade volumes is picking up, another indicator that the U.S. and global recovery is stronger, said Zach Pandl, a U.S. economist at Nomura Securities International in New York.

Some economists expect the data will lead to an upward revision in the government's measure of first-quarter economic growth.

The rise in imports more than offset the export gain and pushed the trade gap up 2.5 percent to $40.4 billion, the largest since December 2008.

The trade gap came in slightly ahead of expectations of Wall Street analysts for a deficit of $40.1 billion.

The bulk of the rise in imports reflected a jump in the dollar measure of oil imports as prices rose.

The growth in both imports and exports was stronger than the government had estimated in its first-quarter gross domestic product estimates published last month.

The assumptions were a little bit better than expected, we now expect a modest upward revision to first-quarter GDP to 3.5 percent from 3.2 percent, Pandl said.

Financial markets largely shrugged off the report as they continued to be guided by developments surrounding the debt crisis in Europe.

U.S. stocks rose as Spain said it would take wide austerity measures to cut its budget deficit. The U.S. dollar slipped versus the euro, while Treasury debt prices fell.

EUROPEAN GROWTH CONCERNS

While worries persist that the debt crisis in Europe could slow recovery in that region, analysts expect only a marginal impact on U.S. export growth.

The direct impact of the euro zone woes on U.S. exports should be limited, said Harm Bandholz, chief U.S. economist at UniCredit Research in New York.

While over the last 12 months, 20 percent of U.S. merchandise exports went to the entire European Union, most of them were going to the UK, Germany, the Netherlands, France or Belgium and not Greece, Portugal or Spain.

U.S. exports of goods and services increased 3.2 percent in March to $147.9 billion, led by gains for consumer goods and industrial supplies and materials. Exports of U.S. goods totaled $102.7 billion.

Combined imports of goods and services rose 3.1 percent to $188.3 billion, as the average price for imported oil rose to $74.32 per barrel, the highest since October 2008.

Imports of goods alone were also the highest since October 2008, as were individual categories for foods, feeds and beverages, industrial supplies and materials and consumer goods.

Going forward, strong production and consumer demand should continue to support import growth over the near term, said Anna Piretti, an economist at BNP Paribas in New York.

The closely watched bilateral deficit with China widened to $16.90 billion in March from a $16.51 billion shortfall the previous month.

Separately, U.S. mortgage applications rose in the week ended May 7, driven by higher demand for home refinancing loans as interest rates reached their lowest level since mid-March, a report from the Mortgage Bankers Association showed.

Demand for loans to purchase homes fell in what was the first week following the expiration of influential federal home buyer tax credits, highlighting the vulnerability of the hard-hit housing market in the absence of key support.

(Additional reporting by Doug Palmer; Editing by Leslie Adler)

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