UPDATE 1-US commercial paper outstanding grows with Fed help

(Adds analyst comments)

NEW YORK, Jan 8 (Reuters) - The U.S. commercial paper market expanded the most since November in the latest week as the new year began, with much help from the Federal Reserve, Fed data showed on Thursday.

The U.S. central bank's support of this cornerstone of short term funding for companies' daily operations, is a key factor helping to buoy the market, analysts said. The commercial paper market has been sharply eroded by the global credit crisis since summer 2007.

"We don't know to what extent the Federal Reserve played a role in the latest increase," said Tony Crescenzi, chief bond market strategist with Miller, Tabak & Co. "But increasingly the private sector has been gobbling up commercial paper and the Fed has not been a sole buyer," Crescenzi added.

More information about how much the Fed contributed to last week's rebound in commercial paper will come with the weekly data on bank borrowings from the Fed and the central bank's support to financial institutions and securities markets which the Fed is due to release at 4:30 p.m. EST.

For the week ended Jan. 7, the size of the U.S. commercial paper market leapt by $83.1 billion to $1.764 trillion, from $1.681 trillion the previous week.

Asset-backed commercial paper outstanding made its biggest ever weekly jump, climbing $46.3 billion after edging up $400 million the previous week. U.S. asset-backed commercial paper outstanding, a sector that was particularly hard hit by last year's sharp selloff in mortgage-related assets, rose to $779.6 billion in the latest week from $733.3 billion the previous week.

Unsecured issuance from financial firms edged up $400 million in the latest week, after falling by $5.0 billion the previous week. (Reporting by John Parry; Editing by )