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CORRECTED - UPDATE 2-US May trade gap widens slightly to $41.84 billion

In WASHINGTON item headlined "US May trade gap widens slightly to $41.84 billion," please read in 7th paragraph as ... said Patrick Fearon, an economist with A.G. Edwards and Sons in St. Louis ... instead of ... said John Lonski, chief economist for Moody's Investor Service in New York ... (corrects attribution).

A corrected repetition follows:

WASHINGTON, July 11 (Reuters) - The U.S. trade deficit remained near record levels in May at $41.84 billion, as U.S. exports struggled to show growth and record demand for foreign oil helped push imports slightly higher, the Commerce Department said on Friday.

The trade gap was the third highest on record and only slightly wider than the revised estimate of $41.65 billion for April. The May tally was in line with an average estimate of $41.50 billion made by analysts before the report.

U.S. crude oil imports increased to a record 320.5 million barrels, while average prices following the swift U.S.-led victory against Iraq fell for the third consecutive month to $24.11 per barrel. They were also the lowest since July 2002.

The price drop trimmed $800 million from the monthly import value, despite the record volume. Overall imports rose slightly to $123.89 billion, led by increased demand for foreign cars, auto parts and capital goods.

U.S. exports rose slightly to $82.05 billion, led by capital goods, cars, auto parts and industrial supplies. Despite the dollar's drop which should make U.S. goods more attractive on the world market, exports have been stuck in a range of $82-$83 billion over the past year -- a reflection of continuing weak overseas demand.

The slight increase in the trade gap had little impact on currency markets, which were more focused on comments made by German Chancellor Gerhard Schroeder that the market interpreted as a call for European Central Bank intervention to weaken the euro, the common currency of the euro zone.

On balance, the trade gap "was pretty much as expected," said Patrick Fearon, an economist with A.G. Edwards and Sons in St. Louis. "However, you have to keep in mind that these are pretty big trade deficits. And it reflects the fact the global economy is weak, especially global capital spending."

Transatlantic trade declined slightly in May, a possible result of friction caused by the Iraq war. U.S. exports to Western Europe dropped about 1.3 percent to $13.82 billion, while U.S. imports from the region fell about 1.6 percent to $22.08 billion.