* Investors cautious ahead of jobs report
* AIG up 17 percent after 1st profit in seven qtrs
* Futures: S&P off 1.2 pts, Dow off 17 pts, Nasdaq up 0.5 (Adds byline, quote)
By Angela Moon
NEW YORK, Aug 7 (Reuters) - U.S. stock index futures trimmed losses on Friday ahead of key monthly jobs data that could provide clues on the direction of the economy and the sustainability of a recent run-up.
In premarket trading, shares of American International Group Inc were up 17 percent at $26.36 after the insurer reported its first profit in seven quarters.
Investors are keen for any insight into a healthy AIG, which was rescued by U.S. taxpayers during the financial crisis. As of Thursday's close, the stock was up nearly 70 percent from the beginning of the week.
The government's non-farm payrolls report has been the focus of investors all week, with the market looking for fewer job losses in July and any indication that the recession is abating.
Economists surveyed by Reuters forecast the Labor Department report will show 320,000 workers lost their jobs in July, the least for any month since September last year.
"The market has already discounted a slightly better, or slightly worse number. For the market to move, the numbers have to be significantly out of forecast," said Peter Cardillo, chief market economist at Avalon Partners in New York.
Wall Street's second day of declines Thursday came on the heels of a four-day rally that pushed U.S. indexes to close at their highest levels since last fall. Investors trimmed long positions in risky assets, including stocks before the non-farm payrolls report.
Despite the pullback, the broad S&P 500 is up 47.4 percent from its 12-year closing low in early March, driven by a string of economic data suggesting a recovery and an earnings season with most S&P 500 companies beating expectations.
S&P 500 index futures were down 1.2 points, and below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 17 points, while Nasdaq 100 futures rose 0.5 points.
In good news for the struggling auto sector, the U.S. Senate approved a $2 billion extension of the "cash for clunkers" incentive program late Thursday and sent the measure to the White House.
Shares of Ford Motor Co was up 1.2 percent at $8.17 before the bell.