Jobless claims fell unexpectedly last week

Initial claims for state unemployment insurance benefits fell 24,000 to a seasonally adjusted 467,000 in the week ended January 3, the Labor Department said, coming well below market expectations for 540,000 new claims.

It was the lowest reading for initial claims since the week ending October 11 last year, when the figure was at 463,000.

Analysts reckoned the decline was likely caused by people putting off filing their applications because of the holidays.

"It covers a holiday period, so people were delaying filing their claims. There is going to be a surge next week," said David Watt, a senior currency strategist at RBC Capital Markets, in Toronto.

"So I don't think this is indicative of the trend, and if anything, I'm surprised the consensus call was so high."

The data was released ahead of December's nonfarm payrolls report, which is expected to show that U.S. employers continued to aggressively wield the ax to cope with a year-long recession that is set to be the longest since the 1981 contraction.

The collapse of the U.S. housing market has triggered the worst economic environment since the Great Depression of the 1930s.

U.S. equity index futures briefly regained some ground on the data, while the dollar and government bond prices were little changed.

The number of people staying on the benefits roll after drawing an initial week of aid jumped to 4.611 million in the week ended December 27, the latest week for which the data is available, from 4.510 million the previous week. This was the highest reading since the week ending November 20 1982.

The four-week moving average of new jobless claims, a better gauge of underlying labor trends because it irons out week-to-week volatility, fell to 525,750 in the week ended January 3 from 552,750 the prior week.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)