* Payrolls rise much less than expected
* S&P 500 faces strong resistance after two-day rally
* Dow off 0.1 pct, S&P down 0.1 pct, Nasdaq up 0.2 pct
(Updates to afternoon, changes byline)
By Edward Krudy
NEW YORK, Dec 3 (Reuters) - U.S. stocks were headed for
their best week in a month on Friday after a brighter
assessment of the economy and a more optimistic view of
Europe's debt crisis drove a rally earlier this week.
Major indexes were little changed on Friday after a
lower-than-expected rise in U.S. nonfarm payroll jobs last
month. For details see []
However, investors have been reassured by signs the economy
is stabilizing and said the Federal Reserve would be less
likely to withdraw stimulus with employment still below
expectations.
Commodity-related shares benefited from a weaker dollar,
which declined after the jobs report, helping to limit losses.
Aluminum company Alcoa Inc <AA.N> gained 1 percent TO $14.23.
Financials, which had their biggest day in three months on
Thursday, gave up some gains. The KBW bank <.BKX> index fell
0.6 percent.
Michael Sheldon, chief market strategist at RDM Financial
in Westport, Connecticut, said that as well as making the Fed
less likely to curtail its bond purchases, the disappointing jobs data would make Congress think twice about raising taxes
next year.
"The likelihood of extending current tax rates has grown
and we are unlikely to see any large legislation out of
Washington that is unfriendly to the economy," he said.
The Dow Jones industrial average <> fell 11.80 points,
or 0.10 percent, at 11,350.61. The Standard & Poor's 500 Index
<.SPX> lost 1.05 points, or 0.09 percent, at 1,220.48. The
Nasdaq Composite Index <> rose 6.21 points, or 0.24
percent, at 2,585.56
Employment barely grew in November. Nonfarm payrolls rose
by 39,000, much less than forecast. The unemployment rate
unexpectedly jumped to a seven-month high of 9.8 percent, the
Labor Department said.
But recent data, including retail sales and other labor
reports, have raised optimism the recovery remains on track
after hitting a soft patch in the summer when fears of a
double-dip recession drove stocks sharply lower.
The lack of investor alarm over the jobs report was
reflected in the CBOE Volatility Index, or VIX <.VIX>, known as
Wall Street's "fear gauge," which shed 6.7 percent to 18.10.
A separate report showed the U.S. services sector grew for
an 11th straight month in November, according to the Institute
for Supply Management. [] U.S. factory orders
dropped in October, the government said. []
The S&P 500 faced strong technical resistance at about
1,228, near a recent high of more than two years and also the
61.8 percent Fibonacci retracement of the index's slide from
October 2007 to March 2009, a key technical indicator.
Support for the benchmark kicks in at 1,200, which was
recently a stubborn resistance point, and the top end of its
recent trading range, and near 1,195, its 10-day moving
average.
Also helping to curb stocks' decline was the euro's gain on
Friday of more than 1 percent against the U.S. dollar <EUR=>.
In recent weeks, the euro's moves have been tightly coupled
with U.S. and global equities.
In company news, U.S.-based mining group Walter Energy Inc
<WLT.N> agreed to buy Canada's Western Coal Corp
<WTN.TO><WTN.L> for about $3.25 billion to create the world's
leading metallurgical coal producer. Walter added 2.6 percent
to $108.29. []
(Reporting by Edward Krudy; Editing by Kenneth Barry)
