* Sept nonfarm payrolls up by 142,000 vs 203,000 expected
* Unemployment rate unchanged at 5.1 pct
* Expectations of rate hike this year recede
* Indexes up: Dow 0.57 pct, S&P 0.67 pct, Nasdaq 0.99 pct (Adds fresh comment and updates prices)
By Noel Randewich
Oct 2 (Reuters) - U.S. stocks extended gains on Friday afternoon as early worries about the economy after a disappointing jobs report gave way to a robust rally in beaten-down energy and materials stocks.
The three major indexes clawed back losses of more than 1.5 percent as poor payroll data hinted at economic weakness while strengthening the argument for delaying a long-awaited interest rate hike.
"The silver lining with this disappointing jobs number is that possibly this could push the rate hike off to the first quarter of 2016," said Jake Dollarhide, chief executive of Longbow Asset Management in Tulsa.
Nonfarm payrolls rose by 142,000, far below the 203,000 economists had expected, and August and July figures were revised down. But the jobless rate held at 5.1 percent.
The report, the last before the Federal Reserve's meeting at the end of October, appeared to contradict Fed Chair Janet Yellen's comment last week that the economy was strong enough to withstand a rate hike this year.
Odds of a December rate hike fell to a little over 27 percent from 44 percent before the report.
With the third-quarter earnings season starting next week, investors are starting to factor in what might be the biggest decline in earnings for S&P 500 companies in six years.
Following a steep selloff since late August, the S&P 500 is trading at 15.1 times expected earnings, slightly below the long-term median of 15.6.
At 3:13 p.m., the Dow Jones industrial average rose 0.57 percent to 16,364.84 points and the S&P 500 gained 0.67 percent to 1,936.79. The Nasdaq Composite added 0.99 percent to 4,672.87.
Eight of the 10 major sectors were higher, with the energy index' 3.29 percent surge leading the advancers.
Chevron rose 3.08 percent and ConocoPhillips jumped 4.94 percent.
The S&P materials index added 1.79 percent, led by a 1.30-percent jump in Alcoa.
In 2015, the energy index has slumped 28 percent while the materials index has lost 16 percent, both badly underperforming the S&P 500's 0.6 percent loss.
Advancing issues outnumbered decliners on the NYSE by 1,976 to 1,065. On the Nasdaq, 1,700 issues rose and 1,071 fell.
The S&P 500 index showed two new 52-week highs and 56 lows, while the Nasdaq recorded nine new highs and 187 lows.
Additional reporting by Charles Mikolajczak, Tanya Agrawal, and Abhiram Nandakumar; Editing by Nick Zieminski