* U.S. economy sheds jobs for a fourth straight month
* Blue-chip Dow above 11,000 for first time since May 4
* Dow up 0.5 pct, S&P up 0.5 pct, Nasdaq up 0.4 pct (Updates to midday; changes byline)
By Angela Moon
NEW YORK, Oct 8 (Reuters) - The Dow broke above 11,000 for the first time since May on Friday as a weaker-than-expected jobs report bolstered expectations that the Federal Reserve will buy more assets to spur the sluggish U.S. economy.
The Fed's hint that it may do more quantitative easing has commanded the attention of equities investors in recent weeks. On Thursday, investors actually took a better-than-expected weekly jobless claims data as a bad sign for the market.
"The twisted irony is this should be perceived as a negative, but Wall Street is banking on heavy Fed involvement to help push stocks higher for the rest of the year. The result could be an increase in risk appetite for equities and a move away from 'safer' and tangible investments like Treasuries and gold," said Todd Schoenberger, managing director of Landcolt Trading LLC in Wilmington, Delaware.
The Dow Jones industrial average gained 52.37 points, or 0.48 percent, to 11,000.95. The Standard & Poor's 500 Index added 5.39 points, or 0.47 percent, to 1,163.45. The Nasdaq Composite Index rose 8.72 points, or 0.37 percent, to 2,392.39.
Options traders also remained confident about the market as the volatility index continued to slide.
The CBOE Volatility index, Wall Street's so-called fear gauge, fell 5.5 percent at 20.37, the lowest since May.
The Labor Department's overall jobs report increased the likelihood of another round of quantitative easing from the Fed, pushing the dollar lower and strengthening commodity-related stocks.
Freeport-McMoRan Copper & Gold Inc gained 3.7 percent to $94.83, while the S&P Materials index shot up 1.9 percent. The Reuters Jefferies CRB index, which covers 19 mostly U.S.-traded commodities, rose 2.3 percent.
With traders still believing that quantitative easing was on the way, the S&P 500 did not escape its recent tie with the euro, shifting as the single currency swings. The euro erased gains against the dollar in early New York trade.
"There is a very direct correlation -- even on the intraday basis, the traders just key on what the dollar is doing," said Terry Morris, senior vice president and senior equity manager of National Penn Investors Trust Co in Reading, Pennsylvania.
Jean-Claude Juncker, the chairman of euro-zone finance ministers, said the euro's exchange rate against the dollar was too strong at $1.40 as the dollar did not reflect U.S. economic fundamentals. The U.S. dollar slid to a 15-year low against the Japanese yen.
Alcoa Inc climbed 6.2 percent to $12.96 a day after it reported that profits topped estimates and said global markets were strengthening. Alcoa's report unofficially kicked off the U.S. corporate earnings season, which could give direction to the market. (Reporting by Angela Moon; Additional reporting by Doris Frankel; Editing by Jan Paschal)