INSTANT VIEW: U.S. consumers' mood sours in June: UMich

NEW YORK (Reuters) - U.S. consumer confidence tumbled more than expected in June, hitting another 28-year low as high inflation and rising unemployment weighed on sentiment, according to a survey released on Friday.

KEY POINTS: * Long-term inflation expectations, a key focus of recent inflation concerns expressed by the Federal Reserve, held steady on May's peak, which was the highest in 13 years. * The Reuters/University of Michigan Surveys of Consumers also said short-term inflation expectations declined slightly, though they remained just off their highest in 26 years. * The Surveys of Consumers said the June reading for its index of confidence fell to 56.7 from May's 59.8. The June reading is the lowest since 51.7 in May 1980, which was the lowest reading ever for the index. * The median expectation of economists for the index was 59.5, according to a Reuters survey. The forecasts ranged from 55.0 to 63.1.

COMMENTS:

BRIAN GENDREAU, INVESTMENT STRATEGIST, ING INVESTMENT MANAGEMENT, NEW YORK

"Somehow I think things over the past two weeks have got a lot uglier. Boy, the Dow's up 137. That's amazing, despite the decline in Michigan consumer sentiment.

"The trouble is that oil went to $136 in the meantime and gasoline went to $4 a gallon in the meantime. I'm afraid we're in a situation where people get the checks, that's money in their pocket now and they spend it, but the affects of the higher gasoline prices are going to be felt over time.

(Higher crude) "In effect that's completely canceled the effect of the fiscal rebates. We're overweight equities, we're officially cautiously optimistic; I have my reservations. What really bothers me is the Federal Reserve's shift in focus away from growth to combating inflation, and this in the face of almost zero growth in the economy.

"It's hard to think the market is seeing fantastic growth, instead the market seems to be seeing stagflation, and to me that is toxic to stocks, absolutely toxic."

ALAN RUSKIN, CHIEF INTERNATIONAL STRATEGIST, RBS GREENWICH CAPITAL, GREENWICH, CONNECTICUT:

"Highlight for this release is the 5-year inflation expectation that was steady at 3.4 percent. The fear was that this would rise further and fuel the burgeoning expectations of rate hikes that look to have run well ahead of the likely out-turn. Less important and something of a surprise is that the 1 year inflation expectation slipped slightly from 5.2 percent to 5.1 percent. The Fed pays more attention to the longer-term numbers, among numerous other indicators."

IAN SHEPHERDSON, CHIEF U.S. ECONOMIST, HIGH FREQUENCY ECONOMICS, VALHALLA, NEW YORK:

"... the tax rebates made some people spend but haven't made most people happier. Both expectations and current conditions fell, both also at 28-year lows. At 49.0, the expectations index, if sustained, is consistent with real consumption dropping by about 1 percent year over year; that hasn't happened since the early seventies. The current conditions index tends to move in line with jobless claims but has fallen much further than the claims numbers suggest. Either claims are about to soar or something else -- falling house prices? -- is making people extremely glum. The good news in the report is that 1-year inflation expectations dipped a tenth to 5.1 percent; 5-year expectations were unchanged at 3.4 percent."

SHAUN OSBORNE, SENIOR CURRENCY STRATEGIST, TD SECURITIES, TORONTO:

"There was chatter about a weaker number coming in and it looks like the whisper number had it about right. That's why the reaction has been mild. In terms of the inflation outlook, we saw the one-year inflation expectation creep down a bit, which is probably a small negative for the dollar, but the general trend in one- and five-year inflation expectations is still higher. So overall, it probably doesn't detract from the focus on inflation. Policy makers are definitely more focused on inflation than growth at the moment, and that is mildly dollar-supportive."

JIM PAULSEN, CHIEF INVESTMENT OFFICER, WELLS CAPITAL MANAGEMENT, MINNEAPOLIS:

"Low confidence, we've sort of been there, the bigger news of the two report today is by far and away the inflation number. What's important about confidence numbers is that if you look back at them all the way back to the 60s, you'll find there's no relationship between the confidence number and what happens to economic growth in the following year. I would argue in some sense that as a stock investors, if the consumer's confident, you should be scared, and if the consumer' scared, you should be happy."