* Initial jobless claims unexpectedly rise
* Q1 GDP contracts slightly less
* Futures off: S&P 5.50 pts, Dow 49, Nasdaq up 8 (Adds details, recasts)
By Leah Schnurr
NEW YORK, June 25 (Reuters) - Wall Street was set for a weak open on Thursday after the number of workers filing new jobless claims rose unexpectedly, as jitters continued to nag that an economic recovery could be tepid.
The number of people who stayed on unemployment benefits after the first week edged higher last week, Labor Department data showed.
Separately, the government said the economy shrank slightly less than previously thought in early 2009, though activity remained weak, and demand was soft.
Markets have bounced as much as 40 percent from March's 12-year low on hopes the economy was stabilizing, but concerns over the strength of a potential recovery have stalled the rally recently. The S&P 500 is up about 33 percent from the trough.
"The negativity that's been overhanging the market will likely persist, and it will be tough to make upside progress in the market in the short term without a string of more positive economic numbers," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.
S&P 500 futures fell 5.50 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures lost 49 points, and Nasdaq 100 futures eased 8 points.
Investors will be watching testimony from Federal Reserve Chairman Ben Bernanke on the acquisition of Merrill Lynch by Bank of America Corp in the tumultuous days following the Lehman Brothers collapse.
On Wednesday, the top Republican on the House Oversight and Government Reform Committee, Darrell Issa, said the Fed had sought to hide its involvement in the deal and accused the central bank of a "cover-up."
Bernanke and others have been criticized over the handling of the acquisition, though he is generally acknowledged as being the best person at the helm during the financial crisis. The Fed chairman's term expires at the end of January, when President Barack Obama will decide whether to reappoint him.
After the bell Wednesday, Jefferies Group Inc, an investment bank focused on mid-sized companies, projected second-quarter profit and revenue would be higher than analyst expectations. Its shares added 7.6 percent at $22 before the bell.
Nike Inc was down 4.1 percent at $50.87 premarket after the world's largest athletic shoe and clothing company reported a worse-than-expected global decline in forward orders.
Investors will continue to assess Wednesday's statement from the Fed after its two-day policy meeting. The central bank repeated concerns about the economic outlook and did not suggest it sees a notable recovery any time soon.
The Fed noted that the pace of the contraction was slowing, but the economy was likely to remain weak for some time.
The statement took the Dow lower for the fourth day and the other indexes ended well off session highs.