The number of Americans filing new applications for unemployment benefits unexpectedly fell last week, suggesting recent gains in employment are being sustained.

Initial claims for state unemployment benefits dropped 15,000 to 358,000, the Labor Department said on Thursday. A four-week average of new filings, which provides a better view of the trend, hit its lowest level since April 2008.

The decline in claims, which defied economists' forecasts for a rise to 370,000, pointed to building strength in the labor market and raised the odds of another solid increase in employment this month.

It not only validates the gains that we had last month ... but it shows that we are likely to add to those gains in a meaningful way in February, said Millan Mulraine, senior macro strategist at TD Securities in New York.

The economy added 243,000 jobs in January and the unemployment rate dropped to a three-year low of 8.3 percent.

Last week's decline in new applications for jobless benefits brought them closer to the 350,000 mark that economists say would signal sustained labor market strength. Initial claims spent a lot of time below that level from 2004-2008 before they shot sharply higher as the economy's troubles deepened.

U.S. stocks opened higher on optimism spurred by the data and by news that Greek leaders had reached a deal on reforms needed for a new bailout, but by late morning stocks had given up their gains. U.S. Treasury debt prices trended lower, while the dollar fell against a basket of currencies.

FED WATCHING

Solid job gains and strong factory activity has led analysts to temper expectations of a sharp slowdown in growth this quarter from the fourth quarter's relatively strong 2.8 percent annual pace.

This improvement is occurring even with the ongoing risks of fiscal austerity in the U.S. and financial and political risks coming out of Europe, said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.

Other data on Thursday showed a jump in wholesale inventories in December, suggesting the government's fourth-quarter growth estimate could be revised higher.

But much will depend on the December trade data on Friday and a broader report on overall business inventories next week.

The recent string of upbeat data has raised doubts about whether the Federal Reserve might launch a third round of bond buying to spur the recovery.

It does reduce the risk of additional monetary accommodation but I don't think it changes in anyway the dial at the Fed for keeping rates accommodative at least at these levels for the foreseeable future, said Mulraine.

Fed officials have said they expect to keep U.S. interest rates extraordinarily low at least through late 2014.

As much they (have been encouraged by the past two months, that is just a modest down payment on what needs to be done to make improvements in labor market conditions, Mulraine added.

Despite the continued improvement, about 23.8 million Americans are either out of work or underemployed and there are no job openings for nearly three out of every four unemployed people.

The number of people still receiving jobless benefits under regular state programs after an initial week of aid rose in the week ended January 28. A total of 7.66 million people were claiming unemployment benefits in the week ended January 21.

(Reporting By Lucia Mutikani; Editing by Neil Stempleman)

Unemployment