(Adds details from latest data)
NEW YORK, March 1 (Reuters) - The U.S. commercial paper market contracted for a third straight week, according to Federal Reserve data released on Thursday, suggesting reduced business borrowing despite signs of an improving U.S. economy.
In the week ended Feb. 29, commercial paper outstanding fell $10.4 billion to $927.2 billion on a seasonally adjusted basis, the Fed said.
Excluding seasonal factors, the size of the commercial market, which companies rely on to finance their payrolls, inventories and daily operations, fell by $1.1 billion to $1.014 trillion in the latest week.
However, the amount of the short-dated IOUs issued by foreign banks rose for the first time in three weeks. Foreign bank commercial paper outstanding grew $3.5 billion on a non-seasonally adjusted basis to $135.6 billion. (Reporting by Richard Leong; editing by Jeffrey Benkoe)