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By John Parry and Walden Siew

NEW YORK, Nov 12 (Reuters) - The U.S. commercial paper market shrank for a second straight week, stalling a three-month expansion trend and hinting the economic rebound may not be as strong as thought, analysts said on Thursday.

For the week to Nov. 11, the commercial paper market fell $76.6 billion to $1.239 trillion outstanding from $1.315 trillion the previous week, Federal Reserve data showed.

Companies issue commercial paper to finance restocking of shelves and pay wages. As gross domestic product expanded in the third quarter, ending the long-running U.S. recession, the size of the commercial paper market grew as companies invested to meet an upturn in demand for their products.

Yet seasonal distortions in the data may have exaggerated the extent to which the market bounced back earlier, just as in the past two weeks the data may be exacerbating the depth of its relapse, analysts said.

"It's down really big again, but the interesting thing is that on a non-seasonally adjusted basis the declines were tiny: only $7 billion," said Ray Stone, economist with Stone & McCarthy Research Associates in Princeton, New Jersey.

A year ago, the Federal Reserve -- the U.S. central bank -- stepped in to underpin the market, which was nearly paralyzed in the wake of Lehman Brothers' September collapse.

The Fed's efforts helped to revive activity around this time last year, a factor which is likely distorting the past two weeks' data, Stone said.