Jobless claims jump as job market struggles

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New claims for unemployment aid rose unexpectedly in the latest week, signaling that the labor market remained on the defensive and the recovery was stumbling along.

The Labor Department reported Thursday that claims rose a seasonally-adjusted 6,000 to 386,000 in the week ended June 9. Even the four-week moving average, considered a more accurate gauge of the labor market, jumped, gaining 3,500 to 382,000. It was the measure's third straight week of gains.

Economists had been expecting new claims to drop to 375,000.

"We've been on the higher side for the past two months on average. You cannot explain this away with normal random volatility. It has not been a marked deterioration, but there has been some slippage in the strength in the labor market," Michael Moran, chief economist for Daiwa Securities, told Reuters.

The report was another in a series of setbacks for those seeking an improvement in the job market. Among them: President Barack Obama who is running for reelection and needs the economy's cooperation in his battle against his GOP rival Mitt Romney.

The rise in jobless claims over the past few weeks suggests that hiring has slowed and the pace of layoffs has quickened as U.S. businesses react warily to a sluggish recovery at home and the financial crisis in Europe.

CNBC's Rick Santelli breaks down the latest numbers on jobless claims & Consumer Price Index, and a look at the impact on the market, with CNBC's Steve Liesman.

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Greece prime minister struggles to form coalition

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ATHENS, Greece — Greece's prime minister struggled Saturday to form a temporary coalition government in the near-bankrupt country, extending a political deadlock threatening billions in international rescue funds.

In an impassioned plea to parliament late Friday, George Papandreou agreed to step aside as premier if necessary to help hammer out a coalition, offering to include the conservative opposition party — a possibility swiftly rejected by its leader.

"The last thing I care about is my post. I don't care even if I am not re-elected. The time has come to make a new effort ... I never thought of politics as a profession," he told parliament before the vote in the early hours of Saturday.

Papandreou said a new coalition government would need four months to secure the new €130 billion ($179 billion) rescue agreement and demonstrate the country's commitment to remaining in the eurozone.

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"Cooperation is necessary to guarantee — for Greece and for our partners — that we can honor our commitments," Papandreou said at a meeting Saturday with President Karolos Papoulias, hours after his Socialist government narrowly survived a confidence vote.

"I am concerned that a lack of cooperation could trouble how our partners see our will and desire to remain in the central core of the European Union and the euro."

But Papandreou's plea was snubbed by conservative opposition leader Antonis Samaras.

"We have not asked for any place in his government. All we want is for Mr. Papandreou to resign, because he has become dangerous for the country," Samaras said in a televised address. "We insist on immediate elections."

Samaras was due to meet the president at 1:00 p.m. (1100GMT) Sunday.

Frustrated with Greece's protracted political disagreements, the country's creditors have threatened to withhold the next critical €8 billion ($11 billion) loan installment until the new debt deal is formally approved in Greece.

Greece is surviving on a €110 billion ($150 billion) rescue-loan program from eurozone partners and the International Monetary Fund. It is currently finalizing a second major deal: to receive an additional €130 billion ($179 billion) in rescue loans and bank support, with banks agreeing to cancel 50 percent of their Greek debt.

Midway through his four-year term, Papandreou was forced by his austerity-weary Socialist party into seeking cross-party support after he abandoned a disastrous proposal to hold a referendum on a new European debt deal — which prompted havoc on world markets and anger from creditors.

Papandreou's popularity has been battered by two years of punishing austerity, causing crippling strikes, violent protests and sharp drop in living standards for ordinary Greeks who face repeated rounds of tax hikes and cuts in pension and salaries.

Late Friday, Papandreou won a confidence vote in the Socialist-led parliament on a pledge that he was willing to quit and form a caretaker coalition.

But he insisted an immediate election would paralyze government and endanger the new rescue deal.

The conservative snub left Papandreou with limited options: negotiating with conservative splinter groups and independents to attract consensus, and possibly invite respected non-politicians to join the effort.

"(Papandreou) will not resign immediately and he cannot resign before there is a new government. What remains to be seen is how flexible he will be in seeking a different governmental makeup," Ilias Nicolacopoulos, a prominent political analyst told AP television.

"There will be a tough game of poker."

The Associated Press and Reuters contributed to this report.

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