New U.S. orders for long-lasting manufactured goods rose in February for the first time in seven months, according to a government report on Wednesday brought some cheer to an economy mired in recession.

The Commerce Department said durable goods orders rose 3.4 percent to $165.6 billion in February, the biggest increase since December 2007, after a revised 7.3 percent plunge the prior month, previously reported as a 4.5 percent decline.

This is the latest in a series of recent economic data indicating the downturn in the economy after a brutal fourth quarter appears to be moderating a bit.

U.S. equity index futures extended gains on the unexpectedly upbeat durables data, while government bond prices deepened losses.

Analysts polled by Reuters had expected overall new orders in February, and orders excluding transportation to both drop 2 percent.

The increase is really, very encouraging, said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey. We've seen a variety of different data points that suggest that though we're not completely done with the deterioration in the overall economy, we're clearly seeing signs of a thaw.

Recent data, including retail sales and housing, have pointed to some signs of a slowdown in the pace of the economy's downturn. The U.S. economy slipped into recession in December 2007.

New orders excluding transportation rose 3.9 percent in February, the largest gain since August 2005, the Commerce Department said. Orders for machinery soared 13.5 percent in February, the biggest increase since March 2004.

One of the few weak spots in the report was civilian aircraft and parts, which dropped 28.9 percent after Boeing reported only four new aircraft orders in the month after 18 orders in January. Motor vehicle and parts eased 0.6 percent after a 7.6 percent tumble in January.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, expanded 6.6 percent in February. The prior month was revised to an 11.3 percent drop, previously reported as a 5.7 percent decline.

Inventories of manufactured durable goods fell for a second consecutive month in February, easing 0.9 percent to $336.8 billion, after dropping 1.1 percent in January, the department said.

(Reporting by Lucia Mutikani; Editing by Neil Stempleman)