NEW YORK – Falling gasoline prices helped ease American shoppers’ worries in September, sending a gauge of consumer sentiment higher than analysts expected.

The New York-based Conference Board said Tuesday that its consumer confidence index rebounded to 104.5 from a revised reading of 100.2. in August. Analysts had expected the index to rise to 103. The reading, the highest since July’s 107, followed a big dip in August, when employment worries dragged down consumer sentiment.

The private research group’s Present Situation Index, which measures how shoppers feel now about economic conditions, rose to 127.7 from 123.9. Its Expectations Index, which measures consumers’ outlook over the next six months, rose to 89.0 from 84.4 last month.

“What we are seeing is an easing of concerns. People are becoming less pessimistic, not significantly more optimistic,” said Lynn Franco, director of The Conference Board Consumer Research Center.

Lower prices at the pump have helped boost consumer sentiment, economists said. Over the past month, the retail price of gasoline plunged by 50 cents, or 17 percent, to average $2.38 a gallon nationwide, according to Energy Department statistics. That is 42.5 cents lower than a year ago, when the energy industry was still reeling from the aftermath of hurricanes Katrina and Rita.

Even more important than lower gas prices, according to economists, is that the job market is steady, though consumers still showed some concerns about jobs in the latest consumer survey, Franco said. The government’s latest report on employment showed that the jobs bounced back in August, which eased fears that the economy might be slowing too much.

That sentiment was reflected in the stock market on Tuesday, when the Dow gained 93.58, or 0.81 percent, to close at 11,669.39. The Dow’s advance put it within range of its high of 11,722.98 set in January 2000.

Falling gasoline prices and a steady job market are good news for retailers as they prepare for the critical holiday season. In general, shoppers have remained resilient throughout the year – even when energy costs were higher – though some chains like Wal-Mart Stores Inc. that cater to low-income shoppers have blamed higher prices at the pump for slowing sales.

Franco cautioned, however, that although consumers’ concerns have eased “there is little to suggest a significant change in economic activity as we enter the final quarter of 2006.”

The consumer confidence report – derived from responses through Sept. 19 to a survey mailed to 5,000 households in a consumer research panel – showed that consumers’ views of the labor market were mixed and hadn’t shown dramatic improvements, Franco said.

Those consumers saying that jobs are currently “plentiful” improved to 25.9 percent from 24.5 percent. But those claiming that jobs are “hard to get” edged up to 21.3 percent from 21.1 percent in August.

The six-month outlook for the labor market improved moderately. Those expecting more jobs to become available in the coming months edged up to 14.4 percent from 14.2 percent in August. Those anticipating fewer jobs decreased to 17.1 percent from 18.1 percent.

“Consumers don’t expect a big pickup in job growth,” Franco said. But she added that they don’t expect a big downturn either.

That ambivalence is reflected in outlooks for the housing market.

Homebuilders Lowe’s Cos. and Lennar Corp. both warned Tuesday of trouble in the housing sector. Their alarms came after a report from the National Association of Realtors on Monday of the first year-over year drop in median home sales prices in more than a decade, as sales fell for a fifth straight month.

But many economists believe that the housing market will have a soft landing. They add that the recent pause in interest rate hikes by the Federal Reserve will offer some relief to home buyers and sellers.

“The biggest challenge is the housing market, but it is not all dark in the consumer psyche,” said Mark Vitner, senior economist at Wachovia Corp. in Charlotte, N.C. “Consumers are realizing that lower home prices may affect them over time, but the drop in gasoline prices is going to be positive to them immediately.”

Vitner added that the housing market has been cooling for almost a year and he hasn’t seen the slowdown making a big dent in consumer confidence.

The National Retail Federation forecast last week an “above-average” holiday season. It expects holiday sales will rise a solid 5 percent in the combined November and December period, though less than the 6.1 percent in the year-ago period.

Ross Bangle, a 23-year-old college student from Norfolk, Va., said he spent a lot of money on holiday presents last year but that if gasoline prices continue to fall, he will use the money he’s saved to buy items such as MP3 players and winter clothing as gifts this year.

In Los Angeles, Jaime Sanches, 25, who was filling up his gas tank at a local station, said lower gas prices are freeing up cash that he plans to use during the holiday season.

“I could spend much more money on my kids to buy whatever they ask for, for Christmas dinner, for presents, everything,” he said.