* IMF warns Greece needs debt extension
* June U.S. nonfarm payrolls increase less than expected
* Average hourly earnings unchanged
* Seven of the 10 S&P sectors down
* Indexes down: Dow 0.16 pct, S&P 0.03 pct, Nasdaq 0.08 pct (Updates with market close, commentary)
By Sinead Carew
July 2 (Reuters) - U.S. stocks closed down slightly on Thursday after the International Monetary Fund warned Greece ahead of its Sunday referendum that it faces a huge financial hole, and mixed jobs data dampened the U.S. economic outlook.
While the IMF was warning that Greece needed an extra 50 billion euros over the next three years to stay afloat, Greek Prime Minister Alexis Tsipras was urging voters to reject a bailout offer from lenders and saying he hoped to sign a new deal on Monday.
"Given the referendum on Sunday in Greece and the holiday weekend, at least for today the action was somewhat muted compared to the rest of the week." Michael Arone, chief investment strategist for State Street Global Advisors' U.S. Intermediary Business.
Trading volume remained low ahead of a long weekend. U.S. markets will not open on Friday in observance the Independence Day holiday.
Slowing U.S. job growth in June tempered expectations for a Federal Reserve interest rate increase in September.
Nonfarm payrolls increased 223,000 last month, below the 230,000 expected by economists polled by Reuters, while average hourly earnings were unchanged in June, taking the year-on-year increase to a paltry 2.0 percent.
The Fed has said it will raise rates only when data shows a sustained economic recovery.
The utilities sector was the best performer in the S&P, rising 1.4 percent. That sector has been battered by a 10.6 percent decline so far this year as investors have been switching positions in anticipation of an interest rate increase.
Investors also faced uncertainty over volatility in China's stock markets and a debt crisis in Puerto Rico.
"There's not enough certainty to be taking long positions going into the holiday weekend," Richard Weeks, managing director at HighTower Advisors in Vienna, Virginia.
The Dow Jones industrial average fell 27.8 points, or 0.16 percent, to 17,730.11; the S&P 500 dipped 0.64 points, or 0.03 percent, to 2,076.78, and the Nasdaq Composite dropped 3.91 points, or 0.08 percent, to 5,009.21.
All three indexes fell for the week, with the S&P 500's decline the biggest since March. The Dow had its biggest weekly decline since April, while the Nasdaq had its biggest weekly decline since early May
BP's U.S.-listed shares rose 5 percent to $41.29 after the company agreed to settle claims from the 2010 Gulf of Mexico oil spill for $18.7 billion.
Xoom Corp shares rose 21 percent to $25.05 after PayPal, which is slated to separate from eBay later this month, said it would buy the digital money transfer provider. EBay rose 2.4 percent.
Western Union, the S&P's biggest percentage loser, fell 6.9 percent to $18.99 after Evercore ISI cut its rating on the stock to "hold" from "buy," citing the Xoom deal.
Advancing issues outnumbered declining ones on the NYSE by 1,536 to 1,516, for a 1.01-to-1 ratio on the upside; on the Nasdaq, 1,761 issues fell and 1,015 advanced for a 1.73-to-1 ratio favoring decliners.
The benchmark S&P 500 index was posting 17 new 52-week highs and 9 new lows; the Nasdaq Composite was recording 48 new highs and 80 new lows.
About 5.5 billion shares changed hands on U.S. exchanges, compared with the 7.6 billion average for the last five sessions, according to data from BATS Global Markets. (Additional reporting by Rodrigo Campos; Editing by Saumyadeb Chakrabarty, Chizu Nomiyama and Steve Orlofsky)