WRAPUP 4-U.S. jobless rate hits 25-year high, payrolls dive

* U.S. jobless rate hits 8.1 percent, highest since 1983

* 651,000 jobs lost in February; Dec, Jan revised deeper

* 4.4 million lost since recession began in December 2007 (Adds details, updates markets)

By Lucia Mutikani

WASHINGTON, March 6 (Reuters) - The U.S. unemployment rate rose to a 25-year high of 8.1 percent in February as employers, buckling under the strain of a severe recession, axed 651,000 jobs, government data showed on Friday.

Adding to the gloom, a combined 161,000 more jobs were lost in January and December than previously believed, the U.S. Labor Department said in its monthly nonfarm payrolls report.

Since the recession started in December 2007, the economy has shed 4.4 million jobs, with more than half of that number lost in the last four months alone. A total of 12.5 million people were unemployed in February, the Labor Department said.

"These are all frightening numbers and connote an economy that is still failing," said Bernard Baumohl, chief global economist at the Economic Outlook Group in Princeton New Jersey. "The economy is still months away from this recession bottoming out."

However, there was relief among investors the drop was not as deep as some had feared, helping the Dow Jones industrial .DJI to end 32.50 points higher at 6,626.94, offsetting a sell-off of technology shares. That took some steam off the Treasuries market <US10YT=RR>, with debt prices dropping.

"The 'whisper' numbers were calling for as low as minus 800,000. Markets will turn before the broader economy, and the economy itself will improve before we begin seeing signs of stability in employment patterns," said Kevin Giddis, head of fixed-income trading at Morgan Keegan in Memphis, Tennessee.

February's jobless rate was the highest since December 1983 and was a half percentage point above January's 7.6 percent.

The increase was the biggest for any month since April 1980. January's job cuts were revised to show a steep decline of 655,000, while December's payroll losses were adjusted to 681,000, the deepest since October 1949.

"We've only had maybe 10 months where we've lost 500,000 jobs in the history of our series. This is four of the 10, all in a row. We've never had four straight months of job losses in excess of 600,000," said Bureau of Labor Statistics Commissioner Keith Hall.

RECESSION DEEPENING

The Obama administration, which is rolling out a $787 billion stimulus package to try to break the economy's alarming downward spiral, said February's jobs statistics were more evidence of the depth of the recession.

U.S. President Barack Obama, speaking in Columbus, Ohio, said: "I don't need to tell the people of this state what statistics like this mean, because so many of you have been watching jobs disappear long before this recession hit."  Continued...