INSTANT VIEW: Consumer mood rebounds in July

NEW YORK (Reuters) - U.S. consumer sentiment recovered from early 1980s lows in July as Americans received tax rebate checks from the government but remained pressured by high gasoline prices and falling home values.

Sales of newly constructed U.S. single-family homes were stronger than expected in June, falling 0.6 percent to a 530,000 annual pace, a government report showed on Friday, providing a glimmer of hope for the beaten-down housing market.

KEY POINTS: * The Reuters/University of Michigan Surveys of Consumers said its final index of confidence rose to 61.2 in July from 56.4 in June. Analyst forecasts had pointed to no change from last month. * Both perceptions of current economic conditions and expectations improved somewhat on the month. Yet the outlook was far from rosy, according to the survey. * "The data still indicate an ongoing downturn in spending that will last well into 2009," the report said. * Inflation expectations one year out held steady at 5.1 percent, while looking further out at a five-year horizon they dipped to 3.2 percent from 3.4 percent.

NEW HOMES * Economists polled by Reuters were expecting sales to slow to a 500,000 seasonally adjusted annual sales rate from a previously reported 512,000 pace in May. May's sales rate was revised up to 533,000, the Commerce Department said. * The inventory of homes available for sale shrank 5.3 percent to 426,000, the lowest since December 2004. The June sales pace put the supply of homes available for sale at 10 months' worth. * The median sales price rose to $230,900 from $227,700 from May, but was down 2 percent from a year earlier, the government said.

COMMENTS:

ANNA PIRETTI, SENIOR ECONOMIST, BNP PARIBAS, NEW YORK:

"Confidence is rebounding, possibly the lower price of oil is helping consumers. Clearly there is a very strong relationship between consumer confidence, especially the Michigan index, and the price of gasoline.

"So weakness in the oil is clearly helping consumers, boosting their confidence for the time being. It bodes well with the durable goods orders.

"Home sales were down, but not as much as expected. Although we think that the housing market remains probably the weakest link in the economy and we expect more weakness going forward, there is some more resilience in the economy."

GREG SALVAGGIO, VICE PRESIDENT OF TRADING, TEMPUS CONSULTING, WASHINGTON:

"We should see to the dollar continue to gradually appreciate today especially if we see the equities market hold up. The equity market seems to like these numbers also. We are really seeing a couple of different factors shape up, oil dropping, equities rally and clearly the good data, which should support at least a minimum dollar rally to yesterday's lows. We are still looking at 1.5650 (on euro/dollar).

JOSEPH BATTIPAGLIA, MARKET STRATEGIST, STIFEL NICOLAUS, YARDLEY, PENNSYLVANIA:

"The housing data still speaks of contraction and falling prices, so it's tough to get excited about that. Durable goods is one of the most volatile data series we have. On the confidence side, these numbers are so materially below the trend seen in a good environment. They will probably get better in coming months as people react to gasoline prices coming off. But I would argue that the data on the merits, does not change anything as far as the recessionary environment we're in."

MICHELLE MEYER, ECONOMIST, LEHMAN BROTHERS, NEW YORK:

"The new home sales data declined much less than we had forecasted, but we are sticking to our view that home sales will find a bottom by the end of the summer or early fall. We are approaching a bottom, but we are not there yet. There is certainly risk to the downside and mortgage rates have increased, which should strain affordability."

GARY THAYER, SENIOR ECONOMIST, WACHOVIA SECURITIES, ST. LOUIS, MISSOURI: