Jobless claims rise 26,000 last week

WASHINGTON (Reuters) - New claims for unemployment benefits rose more than expected last week, a government report showed on Thursday, but held below a key level associated with labor market recovery.

Initial claims for state unemployment benefits increased 26,000 to a seasonally adjusted 397,000, the Labor Department said, after falling to a 2-1/2 year low the prior week.

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Economists polled by Reuters had forecast claims rising to 378,000. The prior week's figure was revised slightly up to 371,000 from the previously reported 368,000.