In the currency market, the dollar rallied against the euro. Late Tuesday, the euro was trading at $1.3319 vs. $1.3365 on Monday.

“Optimistic comments from Federal Reserve Chairman Ben Bernanke and a slower pace of contraction in the service sector have helped to drive the U.S. dollar higher,” said Kathy Lien, director of currency research at Global Forex Trading.

The Institute of Supply Management reported yesterday that its non-manufacturing (services industry) index improved to 43.7% from 40.8% in March. While readings below 50% still indicate contraction, it was the index’s first increase since January.

The gain beat the expectations of economists, who had been projecting the index to rise only to 42%.

“This report is an encouraging sign that the intensity of the recession is diminishing,” wrote John Ryding and Conrad DeQuadros of RDQ Economics.

And Big Ben chipped in with: “The recent data … suggest that the pace of contraction may be slowing,

The U.S. economy shed 693,000 jobs in December, a showing that was far worse than economists had expected and that may even have been the biggest monthly loss of jobs in more than 30 years, analysts said of a closely watched survey of business employment released yesterday (Tuesday).

The monthly ADP Employer Services (ADP) survey - which tracks private non-farm payroll employment - stunned economists, showing a surprising increase from the 476,000 jobs lost in November.

The decline was the worst in the history of the survey, which began reporting in 2001. And if the findings are matched by the official government jobs report, due out Friday, it would be the biggest employment drop since the U.S. recession of 1975.

“This is an eye-poppingly bad number,” Art Hogan, the New York-based chief market analyst at Jefferies & Co. (JEF), told Bloomberg News. “The economy is in