US STOCKS-Wall St flat, materials stocks gain

* U.S. economy sheds jobs in September

* Dollar dips, materials, commodities gain

* Alcoa rises after earnings top view

* Indexes: Dow up 0.1 pct, S&P flat, Nasdaq off 0.3 pct

* For up-to-the-minute market news see [STXNEWS/US] (Updates to early trading)

By Chuck Mikolajczak

NEW YORK, Oct 8 (Reuters) - U.S. stocks were little changed on Friday after a dreary monthly labor report added to hopes the U.S. Federal Reserve would take more steps to invigorate the economy.

The U.S. economy unexpectedly shed jobs in September for a fourth straight month as government payrolls fell and private hiring was less than expected, the Labor Department said. For details, see [ID:nN08205203]

"No, we didn't get much did we? It's like the second they come out with the numbers the market looked past it," said Terry Morris, senior vice president and senior equity manager for National Penn Investors Trust Co in Reading, Pennsylvania.

The Dow Jones industrial average <.DJI> gained 9.23 points, or 0.08 percent, to 10,957.81. The Standard & Poor's 500 Index <.SPX> added 0.37 points, or 0.03 percent, to 1,158.43. The Nasdaq Composite Index <.IXIC> dropped 7.45 points, or 0.31 percent, to 2,376.22.

The overall report increased the likelihood of another round of quantitative easing from the Fed, pushing the dollar lower and strengthening commodity-related stocks. [ID:nN08257193

Freeport-McMoRan Copper and Gold Inc gained 3 percent to $94.96, while the S&P Materials index <.GSPM> was up 1.6 percent. The Reuters Jefferies CRB index <.CRB>, which covers 19 mostly U.S.-traded commodities, rose 2.2 percent.

Because the data did not definitively change expectations, stocks appeared to be vulnerable to short-term fluctuations in other markets, particularly the euro.

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," added Morris.

Jean-Claude Juncker, the chairman of euro zone finance ministers, said the euro exchange rate against the dollar was too strong at $1.4 as the dollar did not reflect U.S. economic fundamentals. The U.S. dollar slid to a 15-year low against the Japanese yen. [ID:nWEA1610]

Alcoa Inc climbed 5.7 percent to $12.90 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. [ID:nN07149466]

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For a graphic charting the recent correlation between S&P E-Mini futures and the euro, click http://link.reuters.com/cec67p ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ (Editing by Jeffrey Benkoe)