US STOCKS-Wall St edges up on jobs report, banks

                                

                                
 * U.S. non-farm payrolls surge in October
                                
 * Shares of financials lead gains
                                
 * Stocks: Dow flat, S&P up 0.3 pct, Nasdaq flat
                                
 * For up-to-the-minute market news see [STXNEWS/US]
  (Updates to morning)
                                
 By Caroline Valetkevitch
                                
 NEW YORK, Nov 5 (Reuters) - U.S. stocks edged higher on
Friday after stronger-than-expected U.S. job gains in October,
with financials leading market gains on speculation they would
increase dividend payments in the future.
                                
 Gains were limited by profit-taking after a rally to
two-year highs in the wake of the Federal Reserve's
announcement Wednesday to buy $600 billion in government bonds
to help the ailing economy.
                                
 Investors were looking to see if the rally could continue
after the week's market-bullish events.
                                
 "The market has had some good news here lately... This
(data) also suggests some re-acceleration, so I think it might
mean the soft spot is over, and the stock market could pierce
those 2010 highs and stay above them," said John Canally,
investment strategist and economist at LPL Financial in
Boston.
                                
 The Dow Jones industrial average <.DJI> was up 3.90 points,
or 0.03 percent, at 11,438.74. The Standard & Poor's 500 Index
<.SPX> was up 4.43 points, or 0.36 percent, at 1,225.49. The
Nasdaq Composite Index <.IXIC> was up 0.22 points, or 0.01
percent, at 2,577.56.
                                
 On Thursday, the Dow and S&P 500 hit their highest levels
since September 2008, while the Nasdaq rose to its highest
since January 2008. The S&P 500 now is up about 16 percent
since the end of August.
                                
 Republican gains in the U.S. midterm election on Tuesday
added to bullish sentiment in stocks, as investors viewed the
change as positive for profit growth.
                                
 Financials on Friday were substantially outperforming other
sectors, with the S&P financial index <.GSPF> advancing 2.7
percent. The Fed is expected to soon allow some healthy banks
to increase payments, people familiar with the decision said
late Thursday.
                                
 Shares of Bank of America <BAC.N> shot up 3.6 percent to
$12.56.
                                
 Boosting optimism about the economy, U.S. employment jumped
by much more than expected last month, with private companies
hiring workers at the fastest pace since April, the government
report showed. For details, click STORY: [ID:nN04265378] TABLE:
[ID:nLLA5ME68F]
                                
 The strength of the report even raised questions about
whether the Fed was too aggressive in its move to keep the
economy growing.
                                
 "That employment report was really good today. Is there
justification to buy $900 billion (in total) in debt?," said
Thomas Villalta, portfolio manager for Jones Villalta Asset
Management in Austin, Texas.
                                
 "I don't think it hurts for the Fed to be doing what
they're doing if it acts as an insurance policy that we're on
track," he said.
                                
 But the unemployment rate remained high at 9.6 percent in
Friday's report, signaling the labor market still has far to
go, he said.
 (Reporting by Caroline Valetkevitch; Additional reporting by
Angela Moon; Editing by Kenneth Barry)