INSTANT VIEW: U.S. consumer confidence up slightly in March

NEW YORK (Reuters) - U.S. consumer confidence rose slightly in March but remained near record lows as the economy remained weak and job prospects grew increasingly uncertain.

Business activity in the U.S. Midwest contracted in March and at a more severe rate than expected, a report showed on Tuesday.

KEY POINTS:

CONSUMER CONFIDENCE: * The Conference Board's sentiment index inched up to 26.0 this month from an upwardly revised 25.3 in February. * The original February reading of 25 represented an all-time low for the index, which dates back to 1967. * The survey's expectations index improved modestly, but perceptions about current conditions worsened from already extremely low levels. * Respondents also showed a strong reluctance to spend money in an uncertain economic environment. * Buying intentions for new cars fell to 3.9 percent from 4.7 percent, while the proportion of people saying they were going to purchase a home over the next six months fell to 2.0 percent from 2.3 percent.

CHICAGO PMI: * The Institute for Supply Management-Chicago business barometer fell to 31.4 from 34.2 in February. * Economists had forecast the index at 34.5. A reading below 50 indicates contraction in the regional economy. * The employment component of the index rose to 28.1 from 26.2 in February. * Prices paid fell to 34.1 from 37.8 and new orders rose to 30.9 from 30.6. But production slipped to 32.7 from 34.7.

COMMENTS:

DAVID RESLER, CHIEF ECONOMIST, NOMURA SECURITIES, NEW YORK:

"I think the key take away is that there's really not much change in consumer attitudes over the month. that's the same story we got from the Michigan index and this is kind of ratifying that.

"The mood is still quite gloomy, people are reticent about spending, gloomy about the job market and generally not feeling very good about things. It's not surprising given the weakness we've seen across the board.

"The more troubling part of this report is that we see continuing declines in planned purchases for homes. That was one area where we'd seen some sign of improvement in actual activity. And now home buying plans are down to 2 percent of the population in the next six months, that's pretty weak.

IAN SHEPHERDSON, CHIEF U.S. ECONOMIST, HIGH FREQUENCY ECONOMICS, VALHALLA, NEW YORK:

"The rise in the Conference Board's consumer confidence index was due entirely to a 1.6-point gain in the expectations index, but this has to be seen in the context of the disastrous 6.4-point drop in February to a record low. The index is still consistent with a five percent fall in year-over-year consumption spending, much worse than signaled by the parallel expectations index from the Michigan sentiment survey.

"At the bottom of cycles, though, the Conference Board version usually falls further and is the less reliable guide to spending. We hope that is the case this time, too. The current conditions index dipped 0.8 point to 21.5; it reflects the unemployment rate and will keep falling. Grim overall, but at least no worse than February."

PETER BOOCKVAR, EQUITY STRATEGIST, MILLER TABAK & CO, NEW YORK:

Chicago PMI: "Obviously it's weaker than expected, but the components were somewhat mixed. This follows some other regional ones that were better than expected, so we need to see more in order to rectify the mixed signals we're getting.

Consumer Confidence: "The number was weak, though it was up from the prior month. The biggest thing for me was the question of whether consumers plan to buy a home in the next six months, that fell to the lowest point since 1982, it's evidence that plans to stabilize this haven't been effective so far."

BRIAN BETHUNE, U.S. ECONOMIST, IHS GLOBAL INSIGHT, WALTHAM, MASSACHUSETTS:

"What we had said about this indicator was that it is more sensitive to the employment situation. That's why we are not seeing much of a bounce even though things appear a little better in the stock market.

"The Reuters/University Michigan consumer sentiments survey is more weighted by financial conditions. That's why we may not be seeing they are giving out the same signal.

"Overall consumers are still pretty much in a situation where they do not feel positive at all. There is very little to be enthusiastic about except for the perceived new direction in Washington. At least in the Michigan index, expectations are improving in March primarily because of the political climate. Other than that the economic drivers are not supportive. There is downward pressure on household wealth. There's also fear of pending layoffs. Job conditions are terrible. There is a general sense of uncertainty because people are peppered with bad news around the world."

DAVID WYSS, CHIEF ECONOMIST, STANDARD & POOR'S RATINGS SERVICES, NEW YORK:

"It's not a huge shock but it's weaker than what we had hoped. The Chicago figure is heavily weighed by autos. It may an indication that autos are in serious trouble.

"We may see better national numbers when they come out on Wednesday."

MARKET REACTION: STOCKS: U.S. equity indexes extend gains after consumer confidence data. BONDS: U.S. Treasury debt prices extend gains. DOLLAR: U.S. dollar remains lower versus euro, gains versus yen.