US STOCKS-Wall St ends best week in a month; more gains seen

                                

  * Payrolls rise much less than expected
  * S&P 500 faces strong resistance after two-day rally
  * Transports, chipmakers touch 52-week highs
  * Dow up 0.2 pct, S&P up 0.3 pct, Nasdaq up 0.5 pct
  * For up-to-the-minute market news see [STXNEWS/US] 
 (Updates close with Nasdaq at almost a 3-year high)
                                
 By Edward Krudy
                                
 NEW YORK, Dec 3 (Reuters) - U.S. stocks closed their best
week in a month on Friday, shrugging off tepid jobs growth in
a sign that the rally may have further to run.
                                
 Late in the day, stocks gainedafter reports that Federal
Reserve Chairman Ben Bernanke said in a CBS television
interview recorded on Nov. 30 that he does not rule out more
than the announced $600 billion in Fed asset purchases. The
interview with "60 Minutes" has yet to be televised.
                                
 The S&P 500 rose 3 percent this week, as investors were
reassured by signs the economy is stabilizing and have taken a
more optimistic view of Europe's debt crisis. This has helped
push the S&P 500 close to a new two-year high. The Nasdaq rose
to nearly a three-year high.
                                
 "We're within 5 to 6 points on the S&P of brand-new
recovery cycle highs," said Jim Paulsen, chief investment
officer at Wells Capital Management, in Minneapolis. "If it
does break through, there is a lot of room to the upside."
                                
 Despite a modest day for major averages, the PHLX
Semiconductor Index <.SOX> and the Dow Jones Transportation
Average<.DJT> touched 52-week highs, a positive sign as both
are viewed as market bellwethers.
                                
 Paulsen said the jobs number was such an outlier that it
did not shake investors' new-found confidence in the economic
recovery.
                                
 "The economic momentum is not doused by what we got this
morning," he said. But he added, "If data reports start going
weak in the next few weeks, then this jobs number is going to
get a lot more attention."
                                
 Volume was at its lowest level this week, according to
early data, and was well below its daily average so far this
year.
                                
 But the market's breadth was overwhelmingly positive on
both the New York Stock Exchange and the Nasdaq, where about
eight stocks rose for every five that fell.
                                
 The Dow Jones industrial average <.DJI> rose 19.68 points,
or 0.17 percent, to end at 11,382.09. The Standard & Poor's
500 Index <.SPX> added 3.18 points, or 0.26 percent, to
1,224.71. The Nasdaq Composite Index <.IXIC> gained 12.11
points, or 0.47 percent, to close at 2,591.46.
                                
  On Friday, the Nasdaq finished at its highest level since
early January 2008.
                                
 ALCOA AND BANKS RISE, VIX FALLS
                                
 Commodity-related shares benefited from a weaker dollar,
which declined after the jobs report. Aluminum company Alcoa
Inc <AA.N> gained 1 percent to $14.22.
                                
 Financials, which had their biggest day in three months on
Thursday, extended gains late in Friday's session. The KBW
bank index <.BKX> rose 0.8 percent.
                                
 Employment barely grew in November. Nonfarm payrolls rose
by only 39,000, much weaker than the 140,000 new jobs that
economists forecast. The U.S. 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.
                                
 Investors also said the Federal Reserve would be less
likely to cut stimulus to the economy while employment
remained weak.
                                
 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 7.1 percent to
18.01
                                
 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.
                                
 Paulson said that traders wanted to stay positioned for a
potential year-end rally if stocks break through resistance.
                                
 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=> to $1.3422. 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 4.7 percent
to $110.52. [ID:nLDE6B20EU]
                                
 Combined volume on the New York Stock Exchange, Amex and
Nasdaq was 6.87 billion, compared with a daily average of 8.47
billion so far this year.
 (Reporting by Edward Krudy; Editing by Jan Paschal)