INSTANT VIEW 3-U.S. March PPI, Feb trade deficit

NEW YORK (Reuters) - Rising energy costs pushed producer prices up by a greater-than-expected 1.0 percent in March, but producer prices excluding food and energy were flat, a Labor Department report showed on Friday.

Analysts polled by Reuters were expecting a 0.7 percent gain in overall producer prices and a 0.2 percent rise in core producer prices.

KEY POINTS: - Core producer prices rose 1.7 percent from the same period 12 months ago, down from a 1.8 percent year-over-year rise in February. - The U.S. trade deficit narrowed unexpectedly in February to $58.4 billion, as crude oil imports fell sharply to the smallest in four years and average imported oil prices were the lowest since December 2005, a government report on Friday showed. The midpoint estimate of Wall Street analysts surveyed before the report was for the February trade gap to widen slightly to $60.0 billion.

COMMENTARY:

ROBERT LUTTS, CHIEF INVESTMENT OFFICER, CABOT MONEY MANAGEMENT,

SALEM, MASSACHUSETTS:

"The first look is very significant data on the core inflation continues to be favorable. We continue to see higher oil hit that segment but most other components are in line and trending lower than expected and that should be viewed favorably by the Treasury market. Lower inflation is always favorable for both financial classes (stocks and bonds) and gives people a little bit of comfort going forward."

As for the Fed, "there will be less talk of further tightening and more talk of stable balances and more favorable inflation trends."

ADAM BROWN, CO-HEAD U.S. TREASURY TRADING, BARCLAYS CAPITAL,