A rise in the number of people claiming unemployment benefit in the last week suggests that the labour market in the US continues to weaken as more and more firms cut staff in the stagnating economy.

The total number of people continuing to claim benefits reached 2.85 million last week, up from 2.76 million in the prior week, bringing continued claims up to the highest level since November 1993. More than 419,000 workers made new claims for the week ending May 26th, a jump of 8,000 from the previous seven-day period.

The increase was the third in a row, keeping new claims at their highest level since April 28th, when they shot up to 425,000, the US Labour Department said.

The news tempered bargain hunting on Wall Street but Xerox led a revival after the heavy sell-off on Wednesday. Shares in Xerox rose 17 per cent at one point on news that the troubled copier and printer maker had filed its annual report with government regulators by yesterday's deadline.

Xerox, which has been under investigation by US regulators over how it recorded revenue from its Mexican operations, admitted it had misapplied common accounting principles but had not recorded any fictitious transactions. The debt-ridden company faced acceleration of repayment of a $220 million (€260 million) loan if it had failed to report by yesterday.

The review by auditing firm KPMG LLP was now complete and "no fictitious transactions were found and the company's liquidity is not impacted", said a spokesman for Xerox, whose shares have almost tripled from its low earlier this year.

Meanwhile, the Bush administration is rushing to post refund cheques to taxpayers to avoid a full-blown recession. Repayments of $300-$600 will become due to millions of Americans under President Bush's tax Bill and could start arriving by the end of the summer.

Treasury Secretary Mr Paul O'Neill said he was applying pressure to tax officials to get the job done more quickly.