U.S. jobless rolls at 26-year peak

By Lucia Mutikani

WASHINGTON (Reuters) - The number of U.S. workers collecting jobless benefits hit a 26-year high last month, data showed on Thursday, and it may head higher as a deepening economic slump forces a broad spectrum of firms to cut jobs.

Contributing to the labour-market gloom, a host of U.S. companies announced large-scale layoffs, including top U.S. phone company AT&T (T.N), which is eliminating 12,000 jobs, and chemical maker DuPont (DD.N), which is cutting 2,500.

Leading U.S. retailers also reported dismal November sales on Thursday. Toting up the results, the International Council of Shopping Centres said sales fell by a record 2.7 percent compared to the same period last year.

Economists said the latest batch of dour news for the world's largest economy, which fell into recession a year ago, pointed to a downturn that could be the sharpest and longest since the downswings in the early 1980s.

"It provides more signs that the recession is going to get a little bit deeper. The numbers today fit with the scenario that fourth quarter GDP is down probably in the neighbourhood of four percent," said Michael Strauss, managing director and senior economist at Commonfund in Connecticut.

"Typically what happens is when the recession gets deeper, we see deeper job cuts. We have seen some confirmation of that today, we will see some more confirmation of that in tomorrow's employment report."

In an effort to fight the recession, the U.S. Federal Reserve is expected to cut interest rates by a half-percentage point to an ultra-low 0.5 percent at a meeting on December 15-16. That would be the lowest on records dating to July 1954.

On Thursday, the European Central Bank and the central banks of Britain, New Zealand and Sweden all lowered rates sharply to try to battle deepening economic ills.