* Jobless claims rose for fifth time in six weeks * Claims data suggests no improvement in labor market * Plunge in gasoline pushes consumer prices lower in May * Softer inflation could give Fed more room to act By Jason Lange WASHINGTON, June 14 (Reuters) - New claims for U.S. state jobless benefits rose for the fifth time in six weeks and consumer prices fell in May, opening the door wider for the U.S. Federal Reserve to help an economy that shows signs of weakening. Though the data released on Thursday showed only a small increase in claims last week, it undermined hopes that a recent slowdown in hiring would prove temporary. "There is very little sign of life," said Hugh Johnson, chief investment officer of Hugh Johnson Advisors in Albany, New York. "The economy as measured by employment conditions has slowed and there doesn't appear to be any change when you look at the claims numbers." New claims rose by 6,000 last week, the Labor Department s aid. Cl aims have been trending higher since February, which may have marked a turning point for the U.S. economy. Every month since the n, e mployers have cut back on new hiring. The slackening U.S. recovery and a worsening debt crisis in Europe have increased expectations of a further easing of monetary policy by the Fed, although economists are divided on whether the central bank will act when it holds it meets on Tuesday and Wednesday. FALLING PRICES The 0.3 percent drop in consumer prices in May was the sharpest decline since December 2008, and it offered the Fed more maneuvering room. U.S. gasoline prices fell 6.8 percent, the most in more than three years, the Labor Department said. The reason for the decline appears to be Europe's debt crisis, which menaces the global economy and has pushed world oil prices lower. That amounts to something of a silver lining for the wider economy because it gives consumers m ore money to spend on other things. Shaky economic data has weighed on President Barack Obama's hopes of re-election in November. Obama and his Republican opponent, Mitt Romney, traded blows on Thursday in dueling speeches on the economy. Fed Chairman Ben Bernanke said last week the main question for U .S. central bankers r ight now is whether the economic recovery will move forward swiftly enough to keep the labor market on an improving path. Recent signs have been worrisome. For example, retail sales contracted last month despite the drop in gasoline prices. U .S. foreclosure starts rose year-over-year in May for the first time in more than two years. "Pressure is mounting on the Fed to give the economy a shot in the arm," said Chris Williamson, an economist at Markit. One reason some Fed policymakers have opposed more monetary stimulus has been persistent inflation pressure o utside the volatile food and energy category. Signs of that pressure were still present in May, when so-called core prices climbed 0.2 percent, matching the prior month's increase. That left core prices up 2.3 percent from a year earlier, even as the gain in overall prices slipped sharply to 1.7 percent. A combination of the worsening debt crisis in Europe and uncertainty over whether t he U.S. Congress will stave off big tax increases and government spending cuts at year-end is souring business and consumer confidence. On Thursday, there were signs Europe's woes were getting worse, as Spain's 10-year bond yields hit a euro-era record of 7.0 percent. Yields above that rate have forced other struggling euro-area nations to seek an international bailout. U.S. stocks rose and prices for U.S. treasuries fell after Reuters reported that central banks are preparing for coordinated action to provide liquidity to the financial system if needed after the Greek election on Sunday. A victory in Sunday's elections by parties in Greece opposed to austerity measures attached to its second E.U. bailout would likely send the euro zone further into crisis by pushing the country towards the currency bloc's exit door. Policymakers around the world are preparing to protect their currencies and economies from any turmoil that might arise.