INSTANT VIEW: Leading indicators up for third straight month

NEW YORK (Reuters) - An index gauging the U.S. economy's prospects increased for a third straight month in June, suggesting the recession was drawing to a close, a private research firm said on Monday.

KEY POINTS: * The index of leading economic indicators, which is supposed to forecast economic trends six to nine months ahead, rose 0.7 percent in June following a revised 1.3 percent gain in May, the New York-based Conference Board said. * Wall Street economists had forecast a rise of 0.5 percent after an initial 1.2 percent May increase. * Over the first half of the year, the index has increased at a 4.1 percent annual rate, the research group said. * "The recession has been losing steam since the spring, although very large job losses continue," Ken Goldstein, a Conference Board economist, said in a statement. "Nevertheless, confidence is slowly rebuilding. If these trends continue, expect a slow recovery this autumn."

COMMENTS:

JOE SALUZZI, CO-MANAGER OF TRADING, THEMIS TRADING, CHATHAM, NEW JERSEY:

"They were supposed to be up, and they were up a little bit more than expected; the market seems to like it. You know what is one of the biggest leading indicators -- the stock market -- so it's kind of a self-fulfilling prophecy there. In a bull mode like this, the market loves these types of numbers and it gets people giddy, but you have to be careful with that, it's really a circular logic. Overall, I don't put much credence into this leading indicator. My leading indicators -- housing, unemployment and toxic bank assets -- all three are still a disaster."

JONATHAN BASILE, ECONOMIST, CREDIT SUISSE, NEW YORK:

"It is a confirmation that a turn in the economy is coming. It bolsters the case of a recovery in the second half of the year. What I'm impressed with is the breadth of the gains. Prior to this, it was the money supply that the Fed was pumping in, which was driving the increase. This all points to signs the recession should end."

DAN FARETTA, SENIOR MARKET STRATEGIST, LIND-WALDOCK, CHICAGO:

"It came out a little better than expected, and with the market being positive the past couple of weeks, we're seeing a slight turnaround. We've got some better-than-expected earnings and some better-than-expected housing data. This could be a near-term bottom for the market. Everything is looking better than expected."

MARKET REACTION: STOCKS: U.S. stock indexes rose slightly. BONDS: U.S. Treasury debt prices were little changed. DOLLAR: U.S. dollar weakened against the euro, rose against the yen.