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UK jobless rate rise slows

LONDON (Reuters) - The number of Britons claiming jobless benefit rose by its smallest amount in almost one-and-a-half years in September, according to official data, in a sign the worst of the job-shedding due to the recession may be over.

But lay-offs are likely to last throughout 2010, which could prove awkward for Prime Minister Gordon Brown, who must fight an election by next summer, and for any new administration which may have to cut public sector jobs to shore up state finances.

The Office for National Statistics said claimant count unemployment rose by 20,800 last month, below forecasts for a 25,000 gain and the smallest rise since May 2008. That took the rate to a 12-year high of 5.0 percent from August's 4.9 percent.

The number of people without jobs on the internationally comparable ILO measure rose by 88,000 to 2.469 million in the three months to August, leaving the jobless rate at 7.9 percent, below forecasts for a reading of 8.0 percent.

The pound rose about half a cent against the dollar as the figures suggested that while unemployment is still rising in Britain, the rate of increase is easing — a sign that the labour market may not be as hard-hit as some had feared.

"It does suggest that the pace of deterioration in the jobs market is easing quite sharply which is encouraging for the outlook for a sustainable recovery," said Philip Shaw, chief economist at Investec.