US STOCKS-Wall St falls on jobless data, credit woes

(Updates to late morning)

By Caroline Valetkevitch

NEW YORK, Jan 31 (Reuters) - U.S. stocks declined on Thursday as a big jump in weekly jobless claims and fresh concerns about financial sector losses pointed to more troubles for the U.S. economy.

Initial claims for unemployment benefits -- a measure of the job market's health -- rose more than expected last week, registering the largest increase in more than two years, government figures showed. For details, see [ID:nN31308587].

The jobless data came a day before the Labor Department's January employment report, considered key data for investors to gauge how the economy is faring.

"People are going to be nervous going into the employment number tomorrow. I think anything that tends to point us in the direction (of job weakness) is going to be a negative," said Owen Fitzpatrick, head of U.S. equity group at Deutsche Bank Private Wealth Management in New York.

The Dow Jones industrial average .DJI was down 70.56 points, or 0.57 percent, at 12,372.27. The Standard & Poor's 500 Index .SPX was down 8.02 points, or 0.59 percent, at 1,347.79. The Nasdaq Composite Index .IXIC was down 15.49 points, or 0.66 percent, at 2,333.51.

Fueling financial sector worries, rating agency Standard & Poor's said late on Wednesday credit losses for financial institutions could eventually swell to more than $265 billion. [ID:nWNA7836].

Energy shares led declines on the Dow and S&P as oil prices CLc1 fell more than 2 percent to $89.76 a barrel. Shares of Chevron Corp (CVX.N: Quote, Profile, Research) declined 1.4 percent to $82.06.