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* 156,000 jobs added in September vs. est. 175,000
* Unemployment inches up to 5.0 pct
* Dollar set for best week since Brexit
* Honeywell, PPG weigh on S&P
* Indexes down: Dow 0.23 pct, S&P 0.29 pct, 0.24 pct (Adds details, comments, updates prices)
By Yashaswini Swamynathan
Oct 7 (Reuters) - U.S. stocks fell on Friday after weaker-than-expected September jobs report had little effect on the prospects of an interest rate hike by the year end.
U.S. employment growth slowed for the third straight month, with employers adding 156,000 jobs in September. Economists polled by Reuters had expected 175,000.
The rate of unemployment climbed to 5 percent from 4.9 percent in August, though the increase was driven by more Americans rejoining the labor force.
Hourly wages for private sector workers rose 2.6 percent, compared with last year, and were in line with economists' expectations.
Federal Reserve Chair Janet Yellen has said the economy needs to create less than 100,000 jobs a month to keep up with population growth.
"It's strong enough that you're not worried about the U.S. slipping into an economic slump," said Michael Jones, an investment officer at RiverFront Investment Group in Richmond, Virginia. "But it's not so strong that it precipitates immediate action from the Fed."
After the report, traders cut the odds of a November rate increase to 10 percent from 15.5 percent. However, the CME Group's FedWatch tool showed a 66 percent chance of a move in December.
The dollar was slightly lower at 96.64, but was on track to record its best week since the Brexit vote in June.
Fed Vice Chairman Stanley Fischer said the jobs report was close to a Goldilocks number, adding that the U.S. economy has been remarkable in reducing unemployment.
At 10:57 a.m. ET (1457 GMT), the Dow Jones Industrial Average was down 41.84 points, or 0.23 percent, at 18,226.66.
The S&P 500 was down 6.25 points, or 0.29 percent, at 2,154.52 and the Nasdaq Composite was down 12.65 points, or 0.24 percent, at 5,294.21.
Seven of the 11 major S&P 500 indexes were lower, with materials falling 1.38 percent and industrials 1.11 percent.
Financials were the top gainers.
Honeywell's 7.3 percent drop weighed on industrials, after the aero parts supplier lowered the upper end of its 2016 sales and profit forecast range. The stock was also the biggest drag on the S&P 500.
Chemical company PPG was down 8.3 percent after forecasting a third-quarter loss.
Tyson Foods plunged nearly 9 percent after Pivotal Capital downgraded its stock to "sell" from "buy".
Declining issues outnumbered advancing ones on the NYSE by 1,678 to 1,062. On the Nasdaq, 1,544 issues fell and 979 advanced.
The S&P 500 index showed four new 52-week highs and three new lows, while the Nasdaq recorded 41 new highs and 22 new lows. (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D'Silva)