(Adds details from report, analyst comment, market reaction)
By David Lawder
WASHINGTON, April 9 (Reuters) - The U.S. trade deficit shrank by 28.3 percent in February to its smallest since November 1999 as imports tumbled and exports managed to grow slightly in the face of shrinking global demand, a U.S. government report showed on Thursday.
The monthly trade gap totaled $26 billion, down more than $10 billion from the revised $36.2 billion deficit in January and marking a record seven consecutive months of decline. The February percentage drop was the steepest since a 34.9 percent fall in October 1996.
Wall Street economists polled by Reuters before the report had forecast a February trade deficit of $36.4 billion.
U.S. exports of goods and services in February rose 1.6 percent from January, while imports fell 5.1 percent to their lowest level since September 2004.
"In five months we've unwound six years of a worsening deficit," said T.J. Marta, chief market strategist at Marta on the Markets in Scotch Plains, New Jersey. "This speaks to the magnitude of the collapse of the U.S. consumer sector. It also speaks to the oil collapsing."
The report came out as U.S. initial jobless claims posted a bigger-than-expected drop of 20,000. U.S. stock index futures extended their gains, while longer-dated U.S. Treasury debt prices were lower and the dollar was higher against the yen.
Total world trade is expected to fall this year for the first time since 1982 as businesses and consumers cut back on spending in response to growing job losses and a continuing credit crisis.
The U.S. trade deficit with China shrank to $14.2 billion - its lowest level in three years -- from $20.6 billion in January. The February trade deficit with Japan fell to $2.2 billion, -- its lowest level since December 1984 - from $4.3 billion.
Imports fell across all major categories, with crude oil imports falling to their lowest value since April 2004 as the February import average price barrel fell to $39.22 from $39.81 the prior month.
Exports increased slightly across all major categories - food, feed and beverages, industrial supplies, capital goods, automotive and consumer goods. (Additional reporting by Richard Leong in New York; Editing by Neil Stempleman)