* U.S. payrolls surge, jobless rate hits 5-1/2 year low
* Indexes off: Dow 0.1 pct; S&P 0.1 pct; Nasdaq 0.2 pct (Updates to late morning session)
By Angela Moon
NEW YORK (Frankfurt: HX6.F - news) , May 2 (Reuters) - U.S. stocks gave up earliergains on Friday, with major stock indexes turning modestlynegative by late morning trading, as investors booked profitsfrom advances earlier in the week.
Wall Street had earlier climbed following a payroll reportthat suggested a sharp rebound in economic activity early in thesecond quarter.
While the report provided an encouraging read on the labormarket, many market participants said Wall Street's gains overthe week made further advances unlikely.
"The market has gotten to fairly full level in terms ofvaluation, and at this point, we need strong earnings to drivethe market higher. Economic news is not enough for some at thispoint," said Rick Meckler, president of investment firmLibertyView Capital Management in Jersey City, New Jersey.
So far in this earnings season, 75 percent, or 374companies, in the S&P 500 have reported. Among those, 68.2percent beat analysts' earnings expectations, 9.9 percent metexpectations and 21.9 percent were below estimates, according todata complied by Thomson Reuters (Frankfurt: TOC.F - news) .
The Dow Jones industrial average fell 22.15 points,or 0.13 percent, to 16,536.72, the S&P 500 lost 1.31points, or 0.07 percent, to 1,882.37 and the Nasdaq Composite dropped 8.075 points, or 0.2 percent, to 4,119.376.
Despite the day's decline, all three indexes are still upmore than 1 percent for the week.
U.S. job growth picked up at its fastest pace in more thantwo years in April and the unemployment rate dived to a 5-1/2year low of 6.3 percent, the Labor Department said. The payrollsgain of 288,000 was the largest since January 2012 and beat WallStreet's expectations for an increase of just 210,000.
The unemployment rate tumbled 0.4 percentage point, touchingits lowest since September 2008. The Labor Department attributedthe decline to a drop in the number of unemployed peoplereentering the labor market as well as a fall in new entrantsinto the labor force.
In company news, U.S. drugmaker Pfizer Inc 'ssweetened 63 billion pound ($106 billion) bid for AstraZeneca (EUREX: AZNF.EX - news)Plc was promptly rejected by the British company Friday. Pfizer shares were down 1.2 percent at $30.79.
LinkedIn Corp shares slipped 5.5 percent to$152.79, a day after the social networking company forecast 2014revenue below Wall Street's expectations, underscoring concernsabout its ability to sustain its rapid growth.
Shares of Ares Management LP, the first U.S.private equity firm to go public in about two years, fell to alow of $18 in early trading on the New York Stock Exchange afterbeing priced at $19, well below the expected range of $21-23, ina turbulent IPO market. They were last trading at $18.36.
German drugmaker Bayer AG (Milan: BAY.MI - news) is nearing an agreementto buy Merck (Dusseldorf: 6MK.DU - news) & Co Inc's consumer healthcare unit, peoplefamiliar with the matter said, in a deal that could value thebusiness at around $14 billion. Merck (Other OTC: MKGAF - news) shares lost 1.8 percent to$58.45. (Additional reporting by Ryan Vlastelica; Editing by BernadetteBaum)
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