NEW YORK (Reuters) – A surge in hiring in the world's largest economy last month drove the Nasdaq to an 11-year high on Friday as optimism grew that the labor market is on a steady path to recovery.

The broad-based gains on solid trading volume also sent the Dow Jones industrial average near a four-year high. The S&P 500 extended its 2012 advance to about 7 percent and was at its highest level in more than six months.

The U.S. economy created jobs at the fastest pace in nine months in January and the unemployment rate dropped to nearly a three-year low of 8.3 percent, the government said.

"It is really hard to find something not to like in the jobs report," said Andrew Goldberg, market strategist at JP Morgan Funds in New York. "There is genuine strength in this report with broad-based jobs creation."

While the news was positive, it will take more months of substantial job gains to maintain momentum in a market that has risen more than 25 percent since October lows.

"There is no doubt that no matter how good this report is, this is still a lukewarm jobs recovery," Goldberg said. "There is a long way to go for this economy."

More than 450 stocks across all sectors hit 52-week highs, including Apple (AAPL.O), United Parcel Service (UPS.N), Yum Brands (YUM.N) and MasterCard (MA.N). The number of NYSE stocks making new 52-week highs was at it highest since July.

Wayne Kaufman, chief market analyst at John Thomas Financial in New York, said he was having a hard time identifying stocks that did not show signs of being overextended.

"Seventy four percent of stocks are over their own 200-day moving average. Those are bull-market statistics," he said.

Consumer discretionary shares and other stocks tied to an expanding economy led gains. Financial shares (.GSPF) rose 2.7 percent, while industrials (.GSPI) and discretionaries (.GSPD) added 1.7 percent to 2 percent.

In another report signaling strength, the pace of growth in the services sector unexpectedly accelerated in January to its highest level in nearly a year.

The Dow Jones industrial average (.DJI) gained 156.82 points, or 1.23 percent, to 12,862.23. The Standard & Poor's 500 Index (.SPX) rose 19.36 points, or 1.46 percent, to 1,344.90. The Nasdaq Composite Index (.IXIC) added 45.98 points, or 1.61 percent, to 2,905.66.

Signs of an improving economy and an absence of bad news from Europe have helped Wall Street stocks rally since last year. But analysts caution that the market is still susceptible to risks such as a flare-up in Europe's debt crisis or geo-political uncertainty in the Middle East that could generate an oil price shock.

For the week the S&P ended up 2.2 percent for its fifth week of gains in a row. The Dow rose 1.6 percent and the Nasdaq also advanced for a fifth straight week, up 3.2 percent for the best week since early December.

The S&P Small Cap 600 (.SML) hit an all time high.

Nonfarm payrolls jumped 243,000, the Labor Department said, as factory jobs grew by the most in a year. The jobless rate fell to 8.3 percent – the lowest since February 2009 – from 8.5 percent in December.

"The real stimulant to future economic growth is the 'boost in confidence' this report provides to the roughly 92 percent of the work force which already has a job," said Jim Paulsen, chief investment strategist at Wells Capital Management in a research note.

Four stocks rose for each one that fell on both the Nasdaq and NYSE. Volume on the NYSE, Amex, and Nasdaq was 8.03 billion shares, more than the daily 200-day moving average of 7.75 billion.

More than half way through the earnings season, 60 percent of S&P 500 companies that have reported have beaten expectations

according to Thomson Reuters I/B/E/S data.

Gilead Sciences (GILD.O) was one of the top gainers on the S&P 500, up 10.9 percent to $54.69 a day after announcing promising early results from a trial of a hepatitis C drug. It also posted adjusted fourth-quarter profit below consensus.

(Reporting by Edward Krudy; Editing by Kenneth Barry)

NEW YORK (Reuters) – A surge in hiring in the world's largest economy last month drove U.S. stocks higher on Friday, with the Nasdaq hitting an 11-year high as optimism grew that the labor market is on a steady path to recovery.

The broad-based gains on solid trading volume also sent the Dow Jones industrial near a four-year high. The S&P 500 extended its 2012 advance to about 7 percent.

The U.S. economy created jobs at the fastest pace in nine months in January and the unemployment rate dropped to nearly a three-year low of 8.3 percent, the government said.

"It was just another report that shows that the economy is healing," said Wayne Kaufman, chief market analyst at John Thomas Financial in New York. "Businesses that are in motion are doing pretty well."

More than 450 stocks across all sectors hit 52-week highs, including Apple (AAPL.O), United Parcel Service (UPS.N), Yum Brands (YUM.N) and MasterCard (MA.N). The number of NYSE stocks making new 52-week highs was at its highest since July.

Kaufman said he was having a hard time identifying stocks that did not show signs of being overextended. "Seventy four percent of stocks are over their own 200-day moving average. Those are bull-market statistics," he said.

Consumer discretionary shares and other stocks tied to an expanding economy led gains. Financial shares (.GSPF) rose 2.3 percent, while industrials (.GSPI) and discretionaries (.GSPD) added 1.7 percent to 1.8 percent.

In another report signaling strength, the pace of growth in the services sector unexpectedly accelerated in January to its highest level in nearly a year.

The Dow Jones industrial average (.DJI) gained 148.08 points, or 1.17 percent, to 12,853.49. The Standard & Poor's 500 Index (.SPX) rose 18.32 points, or 1.38 percent, to 1,343.86. The Nasdaq Composite Index (.IXIC) added 46.92 points, or 1.64 percent, to 2,906.60.

Signs of an improving economy and an absence of bad news from Europe have helped Wall Street stocks rally since last year.

So far this week the S&P is up 2 percent and on track for its fifth week of gains in a row. The Dow has risen 1.5 percent and the Nasdaq, also set for a fifth straight winning week, is up 3 percent and heading for the best week since early December.

Nonfarm payrolls jumped 243,000, the Labor Department said on Friday, as factory jobs grew by the most in a year. The jobless rate fell to 8.3 percent – the lowest since February 2009 – from 8.5 percent in December.

Four stocks rose for each one that fell on both the Nasdaq and NYSE. Volume on the NYSE, Amex, and Nasdaq was 5.41 billion shares, on course to exceed the daily 200-day moving average of 7.75 billion in a sign of greater participation than on recent days.

More than half way through the earnings season, 60 percent of S&P 500 companies that have reported have beaten expectations

according to Thomson Reuters I/B/E/S data.

Gilead Sciences (GILD.O) was one of the top gainers on the S&P 500, up 11.3 percent to $54.88 a day after announcing promising early results from a trial of a hepatitis C drug. It also posted adjusted fourth-quarter profit below consensus.

(Reporting by Edward Krudy; Editing by Kenneth Barry)

NEW YORK (Reuters) – Stocks held firm near recent five-month highs on Wednesday as investors awaited key bond market tests for Europe in the next two days that could determine the direction of the euro zone crisis.

U.S. equities have been performing better in the face of turmoil from Europe's sovereign debt problems. This is a major change from four months ago and comes as investors have taken improving U.S. economic data to heart and an optimistic view about corporate earnings.

Wall Street recovered from early losses on Wednesday brought on by a warning from Fitch Ratings of severe repercussions, including a possible collapse of the euro, without more supportive action by the European Central Bank.

The Fitch news sent the euro to its lowest level in 16 months against the U.S. dollar, which would normally have spelled steeper losses for stocks.

"The U.S. is being looked at clearly as the safe-haven trade, not only on the fixed income side but now even from equity investors," said Ken Polcari, managing director at ICAP Equities in New York.

"We keep talking about the same stuff, but it's been that way for eight, nine months … I hate to say it, but it's almost like people are immune to it now."

The benchmark S&P 500 index recovered to close little changed to continue the recent decoupling of U.S. stocks and the movement of the embattled euro.

The Dow Jones industrial average (.DJI) slipped 13.02 points, or 0.10 percent, to 12,449.45. The Standard & Poor's 500 Index (.SPX)(.INX) gained 0.40 point, or 0.03 percent, to 1,292.48. The Nasdaq Composite Index (.IXIC) gained 8.26 points, or 0.31 percent, to 2,710.76.

Key bond auctions later this week from Italy and Spain, two countries at the center of the euro zone crisis, could hurt sentiment if they go poorly.

Materials shares moved higher, boosted by U.S. Steel Corp (X.N), up 4.7 percent to $28.56, after Credit Suisse upgraded fellow metals company AK Steel (AKS.N) to an "outperform" rating. The S&P materials sector (.GSPM) gained 1 percent.

Further reflecting the weakening link between the euro zone and U.S. stock market, the 50-day correlation between the S&P 500 e-mini futures contract and the euro crossed the zero line this week after four months of being in positive territory, indicating they were no longer on the same path.

Chevron Corp (CVX.N) slipped 2.3 percent to $105.35 in extended trade after the No. 2 U.S. oil company gave its fourth-quarter outlook.

Supervalu Inc (SVU.N) shares dropped 12.5 percent to $7.34 after quarterly sales at the third-largest U.S. supermarket chain missed estimates.

Clothing retailer Urban Outfitters Inc (URBN.O), grappling with inventory and declining margins, said its chief executive resigned unexpectedly, sending the company's shares tumbling 18.6 percent to $23.93.

On the Nasdaq, Crocs (CROX.O) shares rose 16.4 percent to $18.56 after the shoemaker said it expects fourth-quarter revenue to be at the high end of its earlier estimate, becoming the latest footwear company to flag strong sales numbers for the holiday season.

Volume was modest with about 6.65 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, almost even with the daily average of 6.7 billion.

Advancing stocks outnumbered declining ones on the NYSE by 1,646 to 1,352, while on the Nasdaq, advancers beat decliners 1,482 to 1,009.

(Reporting By Chuck Mikolajczak; Editing by Kenneth Barry)

NEW YORK (Reuters) – The S&P 500 index was little changed on Wednesday as investors shrugged off warnings about further weakness in the euro from a lack of leadership in tackling the euro zone debt crisis.

U.S. stocks fell for most of the morning as the euro weakened against the U.S. dollar to its lowest in 16 months after Fitch Ratings warned of dire consequences if the European Central Bank did not take more action to support the currency.

But in a sign of the diminishing link between U.S. equities and the movement of the embattled currency, the S&P recovered most of the losses by afternoon trade.

"There has been a delinking of the U.S. and European markets that speaks to the fact the U.S. is not going into a recession and Europe probably is, though I think it will be mild," said Jeffrey Saut, chief investment strategist at Raymond James Financial in St. Petersburg, Florida.

"There's a flight to safety out of Europe and into our markets, and the world is greatly underinvested in U.S. stocks. That decoupling shovels even more money into the U.S," he said.

Analysts say U.S. stocks are undervalued compared to other markets, buoyed by a strong corporate sector and signs of a sustainable U.S. economic recovery.

The Dow Jones industrial average (.DJI) was down 31.45 points, or 0.25 percent, at 12,431.02. The Standard & Poor's 500 Index (.SPX) was down 1.05 points, or 0.08 percent, at 1,291.03. The Nasdaq Composite Index (.IXIC) was up 5.41 points, or 0.20 percent, at 2,707.91. The Dow and S&P 500 hit five-month highs on Tuesday.

Energy shares led equities lower as U.S. crude futures posted their fourth decline in five days. The S&P energy sector index (.GSPE) fell 1.3 percent and an index of oil services companies (.OSX) dropped 1.6 percent.

Further reflecting the weakening link between the euro zone and U.S. stock market, the 50-day correlation between the S&P 500 e-mini futures contract and the euro crossed the zero line this week after four months of being in positive territory, indicating they were no longer on the same path.

Supervalu Inc (SVU.N) shares dropped 12.2 percent to $7.37 after quarterly sales at the third-largest U.S. supermarket chain missed estimates.

Clothing retailer Urban Outfitters Inc (URBN.O), grappling with inventory and declining margins, said its chief executive resigned unexpectedly, sending the company's shares tumbling 16.7 percent to $24.52.

On the Nasdaq, Crocs (CROX.O) shares rose 15.2 percent to $18.38 after the shoemaker said it expects fourth-quarter revenue to be at the high end of its earlier estimate, becoming the latest footwear company to flag strong sales numbers for the holiday season.

(Reporting By Angela Moon; additional reporting by Rodrigo Campos in New York and Doris Frankel in Chicago; Editing by Kenneth Barry)

NEW YORK (Reuters) – Stocks pulled back from five-month highs in early trading on Wednesday, with pressure on the euro testing the view that U.S. equities were decoupling from the single currency.

Energy shares led equities lower as U.S. crude futures posted their fourth decline in five days. The S&P energy sector index (.GSPE) fell 1.1 percent and an index of oil services companies (.OSX) dropped 1 percent.

The euro fell near 16-month lows against the U.S. dollar after Fitch warned of dire consequences for the currency if the European Central Bank does not take more action.

U.S. equities have been struggling to delink from the performance of the euro, a trend that became the norm in the last quarter of 2011 as traders fretted over possible sovereign defaults in the euro zone.

Steve Goldman principal at Goldman Management in Short Hills, New Jersey, said the market was still very aware of what is happening in European debt markets, ahead of Spanish and Italian bond auctions later this week.

"U.S. markets are tethered to that, even though we still want to move higher," he said. "Even U.S. banks are diverging from the European banking system."

But the link has been weakening. The 50-day correlation between the S&P 500 e-mini futures contract and the euro crossed the zero line this week after four months of being in positive territory, indicating they were no longer on the same path.

The Dow Jones industrial average (.DJI) was down 36.21 points, or 0.29 percent, at 12,426.26. The Standard & Poor's 500 Index (.SPX) dipped 3.39 points, or 0.26 percent, at 1,288.69. The Nasdaq Composite Index (.IXIC) was off 0.83 points, or 0.03 percent, at 2,701.67.

The U.S. Federal Reserve will release its Beige Book, a summary of anecdotal information on current economic conditions around the United States, at 2 p.m. EST. The report may offer more evidence the economy's health is slowly being restored.

Supervalu Inc (SVU.N) shares dropped 10.3 percent to $7.53 after quarterly sales at the third-largest U.S. supermarket chain missed estimates.

Clothing retailer Urban Outfitters Inc (URBN.O), grappling with piled-up inventory and declining margins, said its chief executive resigned unexpectedly, sending the company's shares tumbling 18.4 percent to $23.98.

The Dow and S&P 500 hit five-month highs on Tuesday.

(Reporting by Rodrigo Campos; editing by Jeffrey Benkoe)

LONDON (Reuters) – World stocks and the euro rose to their highest levels in nearly two months on Thursday after European leaders struck a deal to resolve a two-year-old sovereign debt crisis, which threatens the survival of the single currency.

Brent crude and copper prices also rallied. Prices in safe-haven U.S. Treasuries and German Bunds fell, though those from other highly indebted euro zone countries gained.

The deal, announced in the early hours of Thursday, will see private bondholders of Greek debt accept a 50 percent loss on their investment, while banks will be recapitalized and the size of the currency bloc's rescue fund will be leveraged to 1 trillion euros ($1.4 trillion).

"Even though details are not yet in place, the extension of the (rescue fund) will build a firewall between Greece and the rest," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.

"With the agreement on a 50 percent haircut for Greece, quite a bit of uncertainty has been taken off the table as well … The restoration of confidence is an important step in the healing process. However, we will see whether the recovery in risky assets has legs."

Europe's FTSEurofirst 300 (.FTEU3) gained 2.5 percent, with European banks (.SX7P) surging 4.4 percent, while yields on 10-year Greek government bonds fell 15.3 basis points to 24.87 percent.

World stocks measured by the MSCI All-Country World Index advanced 1.7 percent to hit their highest level since early September.

The global benchmark is up 10.6 percent so far this month, on track for its biggest monthly gain in more than two years, driven by hopes that euro zone policymakers would announce a decisive plan to end the two-year-old turmoil at the summit.

"It would be clearly premature to declare the euro crisis as fully resolved. Much more needs to be done, especially regarding fiscal consolidation," Credit Suisse Private Banking said. "Achieving such a consolidation will be difficult in a phase of slow growth, or in some cases recession."

"Nevertheless, it is our impression that EU leaders have made significant progress on all fronts. This suggests that the rebound in risk assets that has been underway in recent days may well continue for some time."

The euro was up 0.9 percent at $1.4021 and 0.4 percent at 106.37 yen.

The announcement also boosted high-yielding currencies, with the Australian dollar up 1.4 percent at $1.0541.

Copper was up 2.4 percent and on track for its best weekly percentage gain since February 2009, while Brent crude rose 1.7 percent to above $110 a barrel.

(Additional reporting by Kirsten Donovan Atul Prakash and Joanne Frearson; editing by Anna Willard)