INSTANT VIEW: Consumer sentiment at lowest level since March

NEW YORK (Reuters) - U.S. consumer confidence fell in early August as a growing number of Americans fretted about their finances even though they expected the broader economy to improve, a survey showed on Friday.

KEY POINTS: * The Reuters/University of Michigan Surveys of Consumers said its preliminary reading of the index of confidence for August fell to 63.2 from 66.0 in July. This was below economists' median expectation of a reading of 68.5, according to a Reuters poll. * The index of consumer expectations fell to 62.1 in early August, its lowest reading since March and down from 63.2 in July. * "Consumers reported much less favorable assessments of their personal finances even as they were more likely to expect improved conditions in the national economy," the Reuters/University of Michigan Surveys of Consumers said in a statement. * The fewest consumers in the survey's sixty-year history reported improved finances, with many citing job losses, shorter working hours and smaller wage gains, said the survey.

COMMENTS:

STEPHEN MASSOCCA, MANAGING DIRECTOR, WEDBUSH MORGAN, SAN

FRANCISCO:

"Not too good, second month in a row. Clearly bad news this morning, so the market is going to go down. Bad news means low prices. The tape has been fairly elevated so people are going to react to it. People have significant doubt about how enduring any recovery is going to be without the consumer. The authorities that be are heartened by the fact the one silver lining piece of news today has been that there has been no impact yet on CPI and there has really been no inflation impact. So as far as they are concerned, they are going to get more and more comfortable with flooding the world with liquidity."

RICHARD CURTIN, DIRECTOR OF REUTERS-U MICHIGAN CONSUMER

CONFIDENCE SURVEY, ANN ARBOR, MICHIGAN:

"Consumers are very negative about their personal finance situation - the most negative since we've started recording and that goes back to 1956.

"Consumers may make exceptions, for example in cash-for-clunkers, but (purchases) are going to increase their debt. The data indicates that consumers are well aware that their homes have come down in price. (Although) there are good discounts on a wide range of goods, they're just so uncertain about the future and the job climate that they're holding off.

"They were completely surprised, like many other observers, by the depth of this recession. Declining home prices and lost hours...they complained about all these things and what makes it different from in the past is that these complaints are as much from high income households as lower income households."

CARY LEAHEY, ECONOMIST, DECISION ECONOMICS, NEW YORK:

"It's a dismal reading. It's showing the worry that economists, including me, have had that you're getting this phantom V recovery on production with output indicators showing some life because of the inventory bounce but consumers, because the labor market appears pretty weak, are just getting more and more nervous.

"The index bottomed at 55 and jumped to 71, but now we've reversed more than half that gain. People just don't want to spend. Generally it's hard to imagine decent back-to-school sales with consumer sentiment closer to 60 than to 70."

TOM SOWANICK, CHIEF INVESTMENT OFFICER, CLEARBROOK PARTNERS, PRINCETON, NEW JERSEY: "It was a much weaker than expected report. I think economists put too much weight on the equity rally to forecast this number. My sense is that it will be revised higher, in part due to the cash for clunker program."

SAMARJIT SHANKAR, DIRECTOR OF GLOBAL STRATEGY, BANK OF NEW YORK

MELLON, BOSTON:

"It does reinforce the view that there's still a long way to go before you see a sustainable turnaround in sentiment. As we saw from the retail sales numbers yesterday, consumer spending is also not really up to expectations. It just underscores the vulnerability of the recovery so far."

SEAN SIMKO, FIXED INCOME PORTFOLIO MANAGER, SEI, OAKS,

PENNSYLVANIA:

The consumer sentiment report "is telling of the environment. As we are going through a recovery we are going to see choppy data. You will see confidence move in two directions. We are not going to see a straight line up. That is reflected in the Treasury market. You know in the end rates will move higher, but in the interim you will see these kind of rallies with Treasuries catching a bid because this report is softer."

JEFF KLEINTOP, CHIEF MARKET STRATEGIST, LPL FINANCIAL, BOSTON:

"The data is weighing on the market, but the effect won't last long. There's usually a knee-jerk reaction whenever confidence data comes in weaker than expected, but then the market moves on because the data is transitory. The data doesn't relate all that much to consumer spending, which we've seen shape up pretty well over the back to school season. My bet is the market will soon ignore this. I'm not really concerned about the number. Markets climb a wall of worry, and it looks like we still have a little more wall to climb."

MARKET REACTION: STOCKS: U.S. stock indexes fell. BONDS: U.S. Treasury debt prices rallied. DOLLAR: U.S. dollar slumped against the yen and rose against the euro.