* Jobless claims rise less than expected
* Altera/Intel deal reportedly called off, shares dip
* Dow flat, S&P up 0.1 pct, Nasdaq up 0.1 pct (Updates to early afternoon)
By Tanya Agrawal
April 9 (Reuters) - U.S. stocks were little changed in choppy trading on Thursday after initial jobless claims data rose less than expected, suggesting an abrupt slowdown in job growth in March could be temporary.
The energy sector helped buoy the market with a 1.2 percent gain on the back of a rebound in crude futures prices.
The market has lately struggled to digest a mixed bag of economic data, with strong numbers backing the idea that the Federal Reserve should begin raising interest rates, and weak data possibly indicating fragile growth and less economic readiness for a rate rise.
The market was struggling to find direction as investors are caught between the angst of losing the support Fed policy has given the market and having few other options regarding where to put their money, said Tim Rudderow, president and chief investment officer at Mount Lucas Management in Newtown, Pennsylvania.
"It's a very difficult argument to make that I should take my money out of the stock market," he said, adding that stocks will likely tread water even through earnings season.
Alcoa shares fell 4 percent to $13.12 after revenue lagged analysts' estimates in the first quarter.
The Dow Jones industrial average rose 2.61 points, or 0.01 percent, to 17,905.12, the S&P 500 gained 2.19 points, or 0.11 percent, to 2,084.09 and the Nasdaq Composite added 6.65 points, or 0.13 percent, to 4,957.48.
Initial claims for unemployment benefits rose 14,000 to a seasonally adjusted 281,000. Economists polled by Reuters had forecast claims rising to 285,000.
Altera shares fell 0.1 percent to $41.96 after falling as much as 7.9 percent. Takeover talks with Intel broke off as the chipmakers could not come to an agreement on price.
Shares of Zynga lost 14.4 percent to $2.48 after announcing on Wednesday that Chief Executive Don Mattrick will step down and founder Mark Pincus will return to head the company.
U.S.-traded shares of Novogen jumped 31.2 percent to $5.92 after the Australian drug company said studies confirmed a potential drug to treat a type of skin cancer.
Declining issues outnumbered advancing ones on the NYSE by 1,685 to 1,224, for a 1.38-to-1 ratio on the downside; on the Nasdaq, 1,666 issues fell and 904 advanced for a 1.84-to-1 ratio favoring decliners.
The benchmark S&P 500 index was posting 11 new 52-week highs and 1 new lows; the Nasdaq Composite was recording 65 new highs and 21 new lows.
Additional reporting by Rodrigo Campos; Editing by Bernadette Baum and Meredith Mazzilli