UPDATE 1-US commercial paper outstanding rises in week -Fed

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NEW YORK Dec 24 (Reuters) - The U.S. commercial paper market expanded in the latest week, resuming growth after four weeks of contraction, Federal Reserve data showed on Thursday.

For the week ended Dec. 23, the size of the U.S. commercial paper market, a vital source of short-term funding for companies' daily operations, rose by $9.3 billion to $1.160 trillion outstanding.

The reemergence of growth could be a positive sign for a slow economic recovery, but Lou Crandall, chief economist for Wrightson ICAP in Jersey City, New Jersey, discounted the significance of the latest seasonally adjusted data.

"This week's slight expansion tells us that the level of (commercial paper) outstanding has leveled out," Crandall said. "And that means businesses are still in a holding pattern."

Asset-backed commercial paper outstanding rose by $2.6 billion after a $9.1 billion fall the previous week.

U.S. asset-backed commercial paper rose to $486.3 billion in the latest week from $483.8 billion the previous week.

Unsecured financial issuance rose by $14.2 billion after a fall of $51.4 billion the previous week.

The overall U.S. commercial paper market peaked at about $2.2 trillion outstanding in August 2007 when the credit crisis broke out. (Reporting by Walden Siew and Tom Ryan; Editing by Leslie Adler and Padraic Cassidy)