WASHINGTON — China boosted its holdings of U.S. Treasury debt for the first time in six months. That development could ease concerns that lagging foreign demand will force the U.S. government to pay higher interest rates to finance its debt.

The Treasury Department reported yesterday that China's holdings of U.S. Treasury securities rose in March 2 percent to $895.2 billion, the first increase since last September.

Total foreign holdings of Treasury securities rose 3.5 percent to $3.88 trillion.

The government reported that net holdings of long-term securities, which includes the debt of U.S. companies as well as government debt, rose $140.5 billion in March, the largest one-month gain on record.

U.S. HOMEBUILDERS MORE OPTIMISTIC

LOS ANGELES — U.S. homebuilders are growing more optimistic about their fortunes, with many expecting improved sales and customer traffic in coming months despite the end of homebuyer tax incentives.

The National Association of Home Builders said yesterday its housing market index, which tracks industry confidence, rose three points this month to 22, the highest reading since August 2007.

Readings below 50 indicate negative sentiment about the market. The last time the index was above 50 was in April 2006.

Builders have seen sales and home orders improve this year thanks to low mortgage rates and government tax credits — $8,000 for new buyers and $6,500 for current owners who buy and move into another property.

MESA AIR LOSES COURT BATTLE AGAINST DELTA

PHOENIX — A federal judge has ruled against regional carrier Mesa Air Group in a long-running dispute with Delta Air Lines over the larger carrier's right to cancel a regional jet service contract.

Mesa said in a statement that it may now have to lay off 500 workers at its Freedom Airline subsidiary because 22 of its regional jets will be without work.

Georgia-based U.S. District Judge Clarence E. Cooper prevented Delta from canceling the $20 million-a-month contract in June 2008 but reversed his ruling yesterday. Delta said Phoenix-based Mesa wasn't completing enough of its Delta Connection flights.

Mesa has been shrinking operations and lost a key United contract for 26 regional jets in December. It now operates 99 aircraft as Delta Connection, US Airways Express and United Express, and independently as Mesa Airlines and go! Mokulele in Hawai'i.