WRAPUP 3-U.S. confidence hits 16-mo high; home prices soft
* U.S. consumer confidence at highest since Sept 2008
* U.S house prices unexpectedly slip in November
* IMF raises global growth forecast (Adds details on Fed policy meeting)
By John Parry
NEW YORK, Jan 26 (Reuters) - U.S. consumer confidence in January hit its highest level in nearly a year and a half, but a closely watched housing index showed an unexpected decline in November home prices, giving a mixed picture of the economic recovery.
The Conference Board, an industry group, reported on Tuesday that consumer confidence rose for the third straight month in January, driven by improved economic conditions.
Its index of consumer attitudes rose to 55.9 in January, the highest reading since September 2008 and up from an upwardly revised 53.6 in December. The index topped the median forecast for a reading of 53.5 from analysts polled by Reuters. For details, see [ID:nN26357538]
"This really bodes well for consumer spending. It shows we are in a modest recovery and we will likely maintain a modest recovery for the next few quarters," said Ward McCarthy, chief financial economist with Jefferies & Co in New York.
The confidence data helped drive U.S. stock indices higher in midday trade, while safe-haven Treasury debt prices pared gains and the dollar was steady.
A decline in job losses in recent months and a resurgent stock market have helped improve consumers' mood as the U.S. economy returned to growth last year after the worst economic slump in decades.
Yet concerns remain about the sustainability of the recovery after the most severe housing market downturn and highest unemployment in more than a quarter century.
With this likely in mind, the Federal Reserve's policy-setting Federal Open Market Committee was meeting on Tuesday and Wednesday to weigh the economic outlook.
Most market analysts do not expect any interest rate move at the conclusion of the meeting, nor any change to the language indicating that the federal funds target rate will remain near zero for an extended period.
Despite some signs of improvement, the outlook for global growth remains cloudy.
The International Monetary Fund on Tuesday sharply raised its forecast for global growth to 3.9 percent from an October estimate of 3.1 percent.
However, China's clampdown on bank lending has raised some concerns in financial markets about global economic growth prospects.
In the United States, the closely watched Standard & Poor's/Case-Shiller indexes released on Tuesday showed that home prices slipped in November.[ID:nNYS007725].
The S&P composite index of home prices in 20 metropolitan areas edged down 0.2 percent in November and registered a 5.3 percent annual drop. A Reuters survey had forecast a 0.1 percent November rise.
October prices were revised to show a 0.1 percent dip, after originally having been reported as unchanged.
Anna Piretti, senior U.S. economist at BNP Paribas in New York, noted that housing sales were affected by the originally scheduled Nov. 30 expiration of the government's tax credit for first-time buyers. Since then, the tax credit has been expanded and extended until June.
"Overall we had positive demand conditions and a market that was very well supported by the government program," Piretti said. "As soon as that government program showed signs of ending, buyers pulled back.
"The demand is not self-sustaining," she added. "I think overall the risks are still slightly to the downside."
Yet a home price index from the U.S. Federal Housing Finance Agency showed that home prices rose 0.7 percent in November from October.
The Conference Board survey showed consumers' expectations at their highest in more than two years. The expectations index rose to 76.5 in January, the highest since October 2007, from December's upwardly revised 75.9. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For graphics on U.S. home prices in November, see link.reuters.com/rus75h ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ (Reporting by Lynn Adler, Chris Reese and Tom Ryan in New York and Lucia Mutikani in Washington; Writing by John Parry; Editing by Leslie Adler and Dan Grebler)