Autos lift U.S. retail sales

By Emily Kaiser

WASHINGTON (Reuters) - A jump in auto and gasoline sales salvaged an otherwise lacklustre June for U.S. retailers, while an inflation gauge jumped by twice as much as expected, suggesting a long-awaited economic recovery will be sluggish.

Commerce Department data on Tuesday showed sales at U.S. retailers rose 0.6 percent from a month earlier, ahead of economists' expectations for a 0.4 percent advance.

However, outside of autos and gas stations the sales results were disappointingly weak, indicating consumers remained wary of stepping up discretionary spending despite signs the recession may be drawing to a close.

"We fell off a cliff at the end of last year and we're at a relatively flat point right now," Rebecca Blank, undersecretary for economic affairs at the Commerce Department, told Reuters in an interview. "The movement is in the right direction but it's not strong enough yet to call this clear signs of the recovery.

A separate report from the Labour Department showed producer prices jumped 1.8 percent last month, far outstripping forecasts for a 0.9 percent gain.

Another set of data showed business inventories fell for a ninth consecutive month, pressured by a steep drop in stocks of motor vehicles and parts.

U.S. stock indexes were little changed near midday, while U.S. government debt prices fell. The dollar was down slightly against a basket of currencies.

Investor attention was focussed on quarterly earnings from investment bank Goldman Sachs Group, which were much stronger than expected.