INSTANT VIEW 3-U.S. Q1 GDP revised to +0.6 pct

NEW YORK (Reuters) - The U.S. economy grew at its weakest rate in more than four years during the opening three months of this year as businesses sold off inventories and Americans imported more foreign goods, a Commerce Department report on Thursday showed.

The department revised down its estimate for first-quarter expansion in gross domestic product, or GDP, to 0.6 percent from 1.3 percent that it estimated a month ago. It was the slowest rate of quarterly growth since the fourth quarter of 2002 when the economy edged ahead at a 0.2 percent rate and was below Wall Street economists' forecasts for a 0.8 percent quarterly growth rate.

KEY POINTS: -U.S. first quarter PCE price index +3.3 percent; core PCE +2.2 percent -U.S. first quarter business investment +2.9 percent -U.S. jobless claims fell in latest week

COMMENTARY:

KEN LANDON, G10 CURRENCY STRATEGIST, JPMORGAN CHASE, NEW YORK:

"There might be a little more dollar selling before payrolls tomorrow but not much. People are comfortable in their positioning. I don't think people want to make a commitment before the number tomorrow.

"You could see euro/dollar get a little above $1.35 but no major breakout."

KURT KARL, HEAD OF ECONOMIC RESEARCH, SWISS RE, NEW YORK:

"We had weaker growth, it really slowed down for the quarter. It is probably going to mean good news for the current quarter though, because once you draw down the inventories it is harder to draw them down further, and the change in inventories is at least one part of this weakness. But all the indicators seem to be saying positive growth for the current quarter."

GEORGE GONCALVES, CHIEF INTEREST RATE STRATEGIST FOR

TREASURIES, AGENCIES AND TIPS, MORGAN STANLEY, NEW YORK

"Investors are really looking toward the second quarter more and have moved beyond what the weakness in the first quarter really meant. The fact that we haven't had much of a major move here in the bond market, I wouldn't look to old data to set the direction of future price action. I think people are still forward-looking."

KEITH HEMBRE, CHIEF ECONOMIST, FAF ADVISORS, MINNEAPOLIS

PRELIMINARY GDP: "It was widely expected that it would be revised down. The Fed kind of dismissed it yesterday; they expect growth to rebound to trend by 2008. Based on the stock run-up in recent months, the stock market has bought that outlook hook-line-and-sinker.

Growth will be a bit of a disappointment regarding those expectations. I'm a bit skeptical because I don't think the housing correction is over yet.

Still, the trade gap and inventory will be a lot less of a drag in the second quarter which should be offset by much slower pace of consumption. My number is 2.0 to 2.5 percent for the second-quarter GDP."

JOBLESS CLAIMS: "It's pretty close to expectations. We got through these mini-cycle of claims. They fall and bounce back and at some point they jump up. We are finally seeing the labor market reacting to the softer GDP. We remain in range of the past 16 months of so. This doesn't influence tomorrow's report."

MICHAEL WOOLFOLK, SENIOR CURRENCY STRATEGIST, BANK OF NEW YORK,

NEW YORK

"It looked like the market was starting to lean into the wind, anticipating a weak number, and we got a little sell-off when it did come in. But it's quite obvious the economy bottomed in the first quarter and this leaves us with a better base from which to bounce back. This report is really in the rear-view mirror. But it does seem clear from yesterday's Fed minutes that the Fed is downgrading its outlook for the economy, which is not seen returning to trend growth until 2008, so we could see some further dollar weakness."

T.J. MARTA, FIXED INCOME STRATEGIST, ROYAL BANK OF CANADA

CAPITAL MARKETS, NEW YORK:

"The bond market made a little bit of a move down in price, The things that we think were temporary got worse. For instance, net exports took a full percentage point off GDP, but we don't expect that to continue."

"Personal consumption was incredibly strong, the highest since the first quarter of 2006."

SCOTT WREN, SENIOR EQUITY STRATEGIST AT A.G. EDWARDS & SONS

INC. IN ST. LOUIS:

"We're still in the 2.3-2.5 percent camp as far as GDP for the year. Clearly we think we'll see a pick-up (in growth). This is the low quarter for the year. We're not looking for recession, we're looking for modest growth. The data was pretty much right in-line. The market's been able to look beyond that. It's been weeks since we've known the GDP was going to be revised lower and we've been going up every since in stocks, so I think the market's been able to look ahead and anticipate modest earnings growth with low inflation."