NEW YORK, Nov. 2, 2007 (AP) -- Stocks traded mixed Friday as investors found a bit of solace in the Labor Department's report of surprisingly strong jobs growth in October but remained nervous about the health of the economy.

The government said employers added 166,000 jobs to their payrolls in October, the most since May. The figure was nearly double what Wall Street economists had expected, according to a Thomson/IFR survey. The unemployment rate held steady at 4.7 percent, in line with September and analysts' consensus forecast.

But Wall Street was clearly still shaky after Thursday's plunge. The market has been mercurial lately, with economic data coming in mixed, the possibility of interest rate cuts ending, and investors unsure about how much exposure to bad debt the world's financial institutions have.

It's likely that as strong as the jobs number was, investors will need to see more evidence of a stronger economy before they can make any major commitments to stocks.

The Dow Jones industrial average fell 65.85, or 0.49 percent, to 13,502.02 in morning trading, pulling back after rising in the opening minutes.

Broader stock indicators also fell. The Standard & Poor's 500 index fell 9.72, or 0.64 percent, to 1,498.72, while the Nasdaq composite index dropped 12.50, or 0.45 percent, to 2,782.33.

On Thursday the Dow tumbled more than 360 points, with the financial sector suffering the biggest losses.

Bond prices dipped slightly. The yield on the 10-year Treasury note, which moves opposite the price, rose to 4.36 percent from 4.35 percent late Thursday.

This week has brought a jumble of contradictory economic news.

The market on Thursday was unnerved by news that consumers cut back their spending in September and that the manufacturing sector expanded in October at the slowest pace since March. But earlier in the week, an initial estimate of third-quarter economic growth came in stronger than economists had expected, at 3.9 percent.

Oil prices rebounded in preopening trading on the New York Mercantile Exchange, after dropping sharply Thursday. Prices have been exceptionally volatile in recent days as the market treads through record territory. A barrel of oil rose 79 cents to $94.28.

The dollar traded mixed against other major currencies.

European stock markets followed Wall Street lower. Britain's FTSE 100 fell 0.59 percent, Germany's DAX index shed 0.47 percent, and France's CAC-40 declined 0.58 percent.

Asian markets tumbled in the wake of Wall Street's losses on Thursday. Japan's Nikkei stock average fell 2.09 percent, while Hong Kong's Hang Seng index fell 3.25 percent.