NEW YORK?Oil prices fell sharply Thursday in response to a batch of weak data which sparked fresh fears about the US economic recovery.

New York's main contract, light sweet crude for September, lost 99 cents from its Wednesday price to $74.43 per barrel.

London's Brent North Sea crude for delivery in October plunged $1.17 to $75.30 a barrel.

"Today's news on the US economy has been nothing but awful," said Paul Ashworth, senior US economist at the Capital Economics consultancy in London.

The US government revealed on Thursday that the number of Americans filing new weekly claims for jobless benefits jumped unexpectedly to 500,000, the highest level in nine months, threatening recovery hopes.

The claims in the week to August 14 increased by 12,000 from the previous week's revised figure of 488,000 ? and came well above most economists' expectations of 475,000.

It was the third straight week in which claims have risen, and underscores the threat posed by unemployment on the recovery from the worst US recession in decades.

More disappointing data came in when the Federal Reserve of Philadelphia said manufacturing activity in the mid-Atlantic region dropped in August.

"The jobless claims was definitely more than the market expected... The bad news was compounded by the Philly indexes showing worse than expected manufacturing," said analyst Andy Lipow of Lipow Oil Associates.

Market sentiment was already dampened on Wednesday by news of a lower-than-expected fall in US crude reserves.

US crude reserves fell 800,000 barrels in the week ending August 13, less than forecast, official figures showed on Wednesday.

Gasoline (petrol) inventories were flat, while analysts had predicted a drop of 500,000 barrels.