April 28 (Bloomberg) -- Consumer confidence jumped more than forecast in April as stocks rallied, mortgage rates dropped and Americans thought more jobs will become available, adding to signs the recession may be easing.

The Conference Board’s sentiment index climbed to 39.2, the highest level since November, from 26.9 in March, the New York- based research group said today. The gain was the biggest since November 2005.

The improvement raises the odds that recent gains in consumer spending, which accounts for 70 percent of the economy, will be sustained. The report indicates efforts by Federal Reserve policy makers, meeting today and tomorrow, to lower borrowing costs and unclog lending may be starting to pay off.

“People are tentatively hoping that the worst is over,” said Adam York, an economist at Wachovia Corp. in Charlotte, North Carolina, who had forecast a gain. “Hopefully, it means we’ll get some gains in consumption.”

Confidence was projected to rise to 29.7, from an originally reported 26 in March, according to the median estimate in a Bloomberg News survey of 62 economists. Forecasts ranged from 26 to 35. The index averaged 57.95 last year.

Home Prices

A report from S&P/Case-Shiller today showed that the slide in home prices in 20 U.S. cities slowed in February for the first time since January 2007. Prices fell 18.6 percent in February from the same month last year after dropping 19 percent the previous month.

Stocks rose after the reports, paring earlier losses, and Treasury securities fell. The Standard & Poor’s 500 index was up 0.4 percent at 861.27 at 10:48 a.m. in New York after dropping as much as 1.2 percent earlier. The yield on the 10-year Treasury note rose to 2.94 percent from 2.91 percent late yesterday.

The Conference Board’s measure of present conditions rose to 23.7 from 21.9 the prior month. The gauge of expectations for the next six months surged to 49.5, the highest level since the collapse of Lehman Brothers Holdings Inc. in September.

The share of consumers who said more jobs will be available in the next six months gained to 13.9, the most since June 2007.

The outlook for current employment was more mixed. Fewer Americans said jobs were plentiful, at the same time those that said employment was hard to get also dropped.

‘Nearing a Bottom’

“Consumers believe the economy is nearing a bottom,” Lynn Franco, director of the Conference Board’s consumer research center, said in a statement. Still, the index “remains well below levels associated with strong economic growth.”

The Standard & Poor’s 500 Index has gained 7.5 percent so far this month, leaving it poised for its first two-month advance in a year. The benchmark index for American equities is up 27 percent since March 9, helped by unexpected increases in U.S. home sales and durable goods orders and a bigger-than- forecast jump in the University of Michigan’s survey of consumer sentiment.

The rally has been led by industries most reliant on economic growth. Shares of banks and brokeraged in the S&P 500 added 70 percent since the March low, while a group of retailers, automakers and restaurant chains climbed 41 percent, industrial companies surged 40 percent and raw-materials producers increased 35 percent, according to data compiled by Bloomberg.

Lehman Impact

Today’s confidence figures corroborate other reports. The Reuters/University of Michigan preliminary index of consumer sentiment rose for a second month in April, advancing to the highest level since Lehman’s bankruptcy in September pushed the U.S. deeper into a slump.

The increase in consumer confidence parallels strong approval ratings for President Barack Obama. A CBS News-New York Times poll taken April 22-26 put the president’s approval rating at 68 percent, higher than the 56 percent mark recorded by predecessor, George W. Bush, at his 100-day mark in office.

A USA Today-Gallup poll taken April 20-21 found 56 percent of respondents saying Obama was doing an excellent or good job, while 63 percent of those questioned by the Pew Research Center for the People & the Press from April 14-21 approved of his performance in office. All three surveys had margins of error of 3 percentage points.

Economists have said the Conference Board’s index tends to be more influenced by attitudes about the labor market.

The economy has lost 5.1 million jobs since the recession began in December 2007. Economists surveyed by Bloomberg in early April predicted unemployment will rise to 9.5 percent by the end of the year.

Government Efforts

At the same time, recent reports show government efforts to support housing and revive lending may be starting to work. Combined purchases of new and existing houses have hovered around a 5 million annual pace since November, and sales at retailers improved in the first two months of the year.

The Libor-OIS premium that indicates banks’ reluctance to lend to each other fell to 0.84 percentage point today, the lowest level since before Lehman collapsed in September, according to data compiled by Bloomberg.

Amazon.com Inc., the world’s biggest Internet retailer, posted a jump in first-quarter sales and profit, bolstered by free shipping offers. Restaurant chains Cheesecake Factory Inc. and Yum! Brands Inc. reported quarterly income that fell less than analysts forecast.

In a sign the plunge in car sales may be easing, AutoNation Inc., the largest publicly traded U.S. car retailer, this month reported a smaller-than-expected drop in first-quarter earnings.

“We saw in the first quarter the first signs of stabilization,” Chief Executive Officer Mike Jackson said in an interview on April 23. Sales improved in the last 10 days of March as banks offered better lending terms, he said.

The average rate on auto loans is 2.67 percentage points above one-month Libor. While that is more than the average of 1.84 percentage points over the past decade, it’s down from about 8 percent in December.

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

Last Updated: April 28, 2009 10:48 EDT