* U.S. economy sheds jobs for a fourth straight month
* Blue-chip Dow above 11,000 for first time since May 4
* Agricultural sector rallies on USDA corn crop forecast
* Dow up 0.6 pct, S&P up 0.6 pct, Nasdaq up 0.8 pct
* For up-to-the-minute market news see [STXNEWS/US] (Updates to late afternoon, changes byline)
By Leah Schnurr
NEW YORK, Oct 8 (Reuters) - The Dow rose above the 11,000 mark for the first time in five months on Friday as a weak jobs report fueled expectations the Federal Reserve will take more action to spur the U.S. economy.
The Fed's hint that it may do more quantitative easing has commanded the attention of equities investors in recent weeks, turning lackluster economic data into a potential positive. For details, see [ID:nN08205203].
"It was almost as if the market was cheering for a bad report to try to solidify that the Fed would engage in quantitative easing," said Scott Marcouiller, chief technical market strategist at Wells Fargo Advisors in St. Louis.
But that expectation was also weighed against comments from St. Louis Fed President James Bullard, who said the Fed faces a difficult decision at next month's policy meeting on whether to offer further stimulus to a U.S. economy that is still growing but only slowly. [ID:nN08199744]
"I think he said it's not in the bag that we're going to do this," said Marcouiller.
Alcoa Inc
The Dow Jones industrial average <.DJI> gained 63.42 points, or 0.58 percent, to 11,012.00, rising above 11,000 for the first time since May 4. The Standard & Poor's 500 Index <.SPX> climbed 7.18 points, or 0.62 percent, to 1,165.24. The Nasdaq Composite Index <.IXIC> rose 18 points, or 0.76 percent, to 2,401.67.
A construction and farm machinery sector index <.15GSPMCHD> rose 3 percent on the belief U.S. grain farmers will use some of their profits from higher crop prices to buy new tractors and harvesting equipment.
Deere & Co
Alcoa, which also increased its outlook for global aluminum demand, gained 6.1 percent to $12.94, making it the biggest percent gainer on the Dow.
Data showed the economy shed jobs in September for a fourth straight month as government payrolls fell and private hiring slowed.
As the surprise drop in the government's non-farm payrolls report increased the likelihood of more quantitative easing by the Fed, the dollar weakened while commodity prices rose.
The Reuters Jefferies CRB index <.CRB>, which covers 19 mostly U.S.-traded commodities, rose 2.7 percent.
Freeport-McMoRan Copper & Gold Inc
Options traders also remained confident about the market as the volatility index continued to slide. The CBOE Volatility index <.VIX>, Wall Street's favorite fear gauge, fell 4.6 percent to 20.58, the lowest since May.
(Editing by Kenneth Barry)