US STOCKS-Futures dip on profit-taking ahead of jobs report

* Futures down after S&P, Dow hit two-year closing high

* U.S. October employment report on tap

* Futures dip: S&P 3.1 pts, Dow 22 pts, Nasdaq 4 pts

* For up-to-the-minute market news see [STXNEWS/US] (Adds byline, quote, AIG earnings results)

By Angela Moon

NEW YORK, Nov 5 (Reuters) - U.S. stock index futures edged lower on Friday as investors booked profits on the heels of a Wall Street rally to a two-year high and ahead of an all-important jobs report.

The non-farm payroll report, released at 8:30 a.m. (1230 GMT), is expected to show employment rose for the first time since May with 60,000 jobs added October, while the unemployment rate is expected to remain elevated at 9.6 percent. For details, see [ID:nN04265378]

The data follows a sharp rally in stocks and commodities worldwide on Thursday spurred by the Federal Reserve's decision to buy $600 billion in government bonds to help the ailing economy.

"It's been a heck of a week with the elections and the Fed. The third leg of the stool comes today with the non-farm payrolls numbers. Based on that, we could rally further or have a pullback, but what is certain is that we won't be falling back to the levels we saw in September," said Arthur Hogan, chief market analyst at Jefferies and Co in Boston.

The dollar was mired near 11-month lows against a basket of currencies <.DXY> while oil eased from a two-year high. Losses were limited by the new round of U.S. economic stimulus, which has boosted the appeal of commodities as an asset class in an environment of a weak dollar.

S&P 500 futures fell 3.1 points were 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 22 points, and Nasdaq 100 futures lost 4 points.

The S&P 500 index is up about 16 percent since the start of September as investors bet that action by the Fed and Republican gains in the U.S. midterm election would create a better environment for corporate profits. The Dow index closed on Thursday at its highest since the collapse of Lehman Brothers bank in September 2008.

Europe's biggest bank HSBC said profits this year were "well ahead" of 2009 levels with losses on bad loans hurting less than at any point since the onset of the credit crisis in 2007. U.S.-traded shares of HSBC fell 2.3 percent to $55.61 in premarket trade.

Toyota Motor Corp <7203.T> cautiously nudged up its profit forecast, underscoring how vulnerable Japan's biggest company is to the firm yen and a tepid sales recovery that are weighing on its shares.

American International Group Inc shares fell 2.8 percent to $43.50 in premarket trade after the bailed-out insurer reported it lost more than $2 billion in the third quarter. [ID:nN05282846]

Late on Thursday, Starbucks Corp raised its full-year profit forecast, boosting confidence it has entered a new phase of growth. The stock was up 3.2 percent at $30.70 in premarket trade.

CBS Corp reported a 42 percent rise in third-quarter profit on Thursday and authorized a $1.5 billion share repurchase program.

Wal-Mart Stores Inc , the world's biggest retailer, said it was cooperating with an investigation into possible insider trading related to its takeover of Japanese retail chain Seiyu Ltd.

S&P 500 companies scheduled to report earnings throughout the day include Coventry Health Care Inc , Ventas Inc and Washington Post Co .

Data on September pending-home sales, expected to rise 3 percent month over month, will be released at 10:00 a.m. (1400 GMT).

(Editing by Padraic Cassidy)