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Instant View: Consumer confidence, manufacturing picks up

(Reuters) - Consumer confidence rose in October to its highest in more than four years and a survey of U.S. manufacturing conditions rose in September to hit its best levels since May.

CONSTRUCTION SPENDING: U.S. construction spending rose in September by the most in three months as stronger spending on homes made up for drops in business and government projects.

KEY POINTS: * The Conference Board, an industry group, said its index of consumer attitudes gained to 72.2 from a downwardly revised 68.4 in September. It was the highest level since February 2008, though it came in shy of economists' estimates for 72.5. * The Institute for Supply Management (ISM) said its index of national factory activity rose to 51.7 from 51.5 in September, topping economists' expectations for a slight decline to 51.2, according to a Reuters poll of economists. * A reading above 50 indicates expansion in the manufacturing sector. It was the second month in a row the sector has grown after contracting through the summer. * Construction spending climbed 0.6 percent to an annual rate of $851.6 billion, the Commerce Department said on Thursday. That was in line with analysts' forecasts in a Reuters poll.

COMMENTS: CHRISTOPHER LOW, CHIEF ECONOMIST, FTN FINANCIAL, NEW YORK

ISM: "It looks like manufacturing has stopped deteriorating. Exports have been leveling off. That's been a major weakness. We have been cautious here. ISM is using more generous more seasonal adjustments. It's weak growth but it's growth. China's ISM crawled back above 50 but Europe is still in deep trouble. Manufacturing globally is sluggish, but the United States seems to be doing okay."

CONSUMER CONFIDENCE: "The big thing weighing on business sentiment is the fiscal cliff. Things like investing and hiring are delayed but not canceled outright.

"The divergence between business and consumer sentiment is unusual. Consumers seem oblivious about possible tax increases. Maybe consumers are overestimating the President's ability to get things done. The wealth effect shows up in these surveys. The stock market is back near the cycle high. People are financially better off. The jobs market is not doing great, and we have seen a spate of layoff announcements across a number of industries."

TOM DI GALOMA, MANAGING DIRECTOR, NAVIGATE LLC, STAMFORD, CONNECTICUT:

"Solid economic data seen today, however tomorrow's jobs report is still the key focus of the week and we should see some slowing in employment gains from last month's figure."

ALAN LANCZ, PRESIDENT, ALAN B. LANCZ & ASSOCIATES INC., AN INVESTMENT ADVISORY FIRM, TOLEDO, OHIO:

"Everything looked fairly good; having ISM over 51 is definitely a positive. In all, it bodes well for the bull side, and finally gave some investors a catalyst to buy.

"I think the numbers are trending well, and I think not having anything go wrong with the opening after two days (of the stock market being closed) boosted the confidence of investors.

"Tomorrow I think will be more of a trump card and can take it all away."

DAVID SLOAN, ECONOMIST, 4CAST LTD, NEW YORK:

"The ISM was positive. Seasonal adjustments did help this month, that's why it seems to have outperformed some of the regional surveys. It's somewhat encouraging. New orders were up with favorable seasonal adjustments... Overall it's a somewhat encouraging number even though it implies a subdued pace of growth."

JOSEPH TREVISANI, CHIEF MARKET STRATEGIST, WORLDWIDE MARKETS, WOODCLIFF LAKE, NEW JERSEY:

"Manufacturing in the U.S. is recovering but the pace is not enough to provide improvement to the job market. Without increasing jobs, manufacturing will not be able to sustain its positive momentum. There is no impact on the dollar."

MARKET REACTION:

STOCKS: U.S. stock indexes extended gains BONDS: U.S. bond prices edged lower FOREX: The dollar was little changed

(Americas Economics and Markets Desk; +1-646 223-6300)

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