* Wachovia deal boosts financials, along with bailout hope
* House vote on $700 billion rescue nears
* Market unruffled by weak Sept jobs report
* Dow up 1.6 pct, S&P 500 up 2.3 pct, Nasdaq up 2.7 pct
(Updates to midday)
By Ellis Mnyandu
NEW YORK, Oct 3 (Reuters) - U.S. stocks advanced on Friday
as Wells Fargo's proposed acquisition of troubled U.S. bank
Wachovia Corp <WB.N> lifted financial shares and the House of
Representatives readied to a vote on a $700 billion plan to
shore up financial markets.
Investors bet the House, which earlier this week rejected
the legislation, would pass a revised bill to stabilize the
U.S. financial sector. A top Republican leader was optimistic
the deal would pass.
The deal between Wells-Fargo, one of the strongest U.S.
banks left, and Wachovia was a stock transaction valued at more
than $16 billion. It scuppered a deal announced on Monday and
backed by the government for Citigroup <C.N> to buy parts of
Wachovia.
"The bottom line, the market is set up for a positive vote
from the House, and we expect part of the market's move up is
in response to that," said Fred Dickson, market strategist at
D.A. Davidson & Co in Lake Oswego, Oregon.
The Dow Jones industrial average <> rose 167.58 points,
or 1.60 percent, to 10,650.43. The Standard & Poor's 500 Index
<.SPX> climbed 25.26 points, or 2.27 percent, to 1,139.54. The
Nasdaq Composite Index <> added 53.77 points, or 2.72
percent, to 2,030.49.
Earlier, the market was unfazed by a government report
showing the number of U.S. jobs lost in September was the
greatest in 5-1/2 years. Signs in another report that growth in
the vast services sector improved slightly in September offered
encouragement.
Shares of Wachovia jumped 69.3 percent to $6.62 on the New
York Stock Exchange, while the S&P financial index <.GSPF>
climbed 3.3 percent.
Among other financial companies, Goldman Sachs <GS.N> was
up 5 percent at $138.11 and Bank of America <BAC.N> rose 4
percent at $37.83. But shares of Citigroup declined almost 9
percent to $20.56.
On Nasdaq shares of Apple Inc <AAPL.O> jumped more than 4
percent to $104.31 after the maker of the iPod denied a report
that Chief Executive Steve Jobs had a heart attack. Before the
denial, Apple had dropped as much as 5 percent.
The Labor Department said employers slashed an unexpectedly
large 159,000 jobs as employment contracted for a ninth
straight month. The Institute for Supply Management said its
non-manufacturing index rose slightly to 50.2.
The $700 billion financial sector bailout is designed to
mop up bad mortgage debts on the banks' balance sheets in a bid
to loosen up lending to boost economic growth.
(Additional reporting by Steven C Johnson, Editing by Kenneth
Barry)
