Jobless claims, leading index fall

By Nancy Waitz

WASHINGTON (Reuters) - Initial claims for U.S. jobless benefits fell to their lowest level in two months last week, but a forward-looking indicator of economic activity suggests cooler growth in the second half of 2007, according to reports on Thursday.

First-time claims for state unemployment benefits fell to 301,000 in the week ended July 14 from an upwardly revised 309,000 claims the prior week, the Labor Department said. Economists had expected them to rise slightly.

It was the second consecutive weekly decline and took initial claims to their lowest level since mid-May.

In a separate report, the New York-based Conference Board said its Index of Leading Economic Indicators fell 0.3 percent in June after a downwardly revised 0.2 percent rise in May.

Wall Street had expected the index to hold steady.

"The leading index has slowed in recent months, suggesting a possible softening of the overall pace of economic activity later in the second half of this year," said Ken Goldstein, labor economist for the Conference Board.

Prices for U.S. government bonds slipped as the unexpected drop in weekly claims offered a convenient excuse for investors to book profits. U.S. stocks opened with solid gains as companies reported earnings above expectations ID:.N.

"It is still a mixed job picture," said Robert Brusca, chief economist for Fact and Opinion Economics in New York.