* Oct nonfarm payrolls up more-than-expected
* Unemployment rate hits lowest since April 2008
* Financial stocks rise, utilities slump
* Alibaba drops as Chanos says stock a possible short
* Indexes down: Dow 0.33 pct, S&P 0.59 pct, Nasdaq 0.09 pct (Updates to early afternoon)
By Abhiram Nandakumar
Nov 6 (Reuters) - U.S. stock indexes were slightly lower in afternoon trading on Friday after a stronger-than-anticipated jobs report hardened the chance that the Federal Reserve would finally raise interest rates in December.
Eight of the 10 major S&P sectors were lower, with the interest-rate sensitive utilities sector's 3.83 percent decline easily the worst. The financials sector was up 0.84 percent, led by bank stocks.
Job growth in October was the best since December 2014, while the unemployment rate fell to 5 percent, the lowest since April 2008. The jobless rate is now at a level many Fed officials view as consistent with full employment.
"In the short term, this is likely to trigger increased volatility, but if rates edge up and the world doesn't end, markets will start gaining confidence," said Robert Craig, Private Client Investment Manager at MB Capital in London.
Traders raised the odds of a hike in December to 70 percent from the 58 percent just before the jobs data was released, according to the CME Group's FedWatch program.
The dollar hit a 6-1/2 month high after the data.
Higher rates increase borrowing costs for companies, while a strong dollar hurts their income from overseas markets.
At 12:37 p.m. ET (1737 GMT), the Dow Jones industrial average was down 59.46 points, or 0.33 percent, at 17,803.97.
The S&P 500 was down 12.42 points, or 0.59 percent, at 2,087.51 and the Nasdaq composite index was down 4.40 points, or 0.09 percent, at 5,123.34.
Still, all three indexes were poised to end higher for the sixth week in a row, with the Dow on track for its best six-week run in nearly four years.
Among financial stocks, JPMorgan rose 2.9 percent and gave the biggest boost to the S&P 500, followed by Bank of America, up 3.5 percent and Citigroup, up 3 percent.
Goldman rose 2.8 percent and was the biggest influence on the Dow, followed by Disney, which was up 2.2 percent after reporting a higher-than-expected profit.
Exxon was down 1.5 percent to $83.56, the biggest drag on the S&P, after New York subpoenaed the company over its statements on climate change.
Energy stocks fell 1.4 percent as crude oil prices slipped. Chevron shed 2.3 percent and weighed the most on the Dow.
Alibaba fell nearly 5 percent after a CNBC report said short-seller Jim Chanos pitched the company as a possible short.
Declining issues outnumbered advancing ones on the NYSE by 2,172 to 886. On the Nasdaq, 1,477 issues rose and 1,256 fell.
The S&P 500 index showed 12 new 52-week highs and eight new lows, while the Nasdaq recorded 118 new highs and 57 new lows. (Reporting by Abhiram Nandakumar in Bengaluru, additional reporting by Charles Mikolajczak; Editing by Savio D'Souza)