* January nonfarm payrolls 151,000 vs 190,000 est
* Unemployment rate falls to 4.9 pct
* Average hourly earnings rise 12 cents, or 0.5 pct
* Traders pricing in one interest rate hike this year
* Indexes down: Dow 1.05 pct, S&P 1.27 pct, Nasdaq 2.12 pct (Adds details, comment, updates prices)
By Tanya Agrawal
Feb 5 (Reuters) - Wall Street was sharply lower on Friday after data showing a surge in wages in January and an eight-year low unemployment rate kept the prospects of a Fed rate hike alive this year.
Nonfarm payrolls increased by 151,000 jobs last month, below the 190,000 expected by economists polled by Reuters as the boost to hiring from unseasonably mild weather faded.
Despite the expected slowdown in job growth, the unemployment rate fell to 4.9 percent, the lowest since February 2008, and average hourly earnings increased 0.5 percent, suggesting the labor market recovery remains firm.
"That ... serves as a caution to markets that it is too early to take a Federal Reserve March hike completely off the table," said Mohamed El-Erian, chief economic adviser at Allianz, Newport Beach, California.
Fed Chair Janet Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with growth in the working age population.
Shortly after the jobs report, traders were pricing in one rate hike this year, up from no hikes in 2016.
"The Fed I think is still very much in tightening mode. The financial turmoil may lead them to delay, but they're still going to raising rates at some point," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
Stocks have had a rough start to 2016, hurt by tepid U.S. growth, falling oil prices and concern that the world faces a China-led slowdown.
At 11:01 a.m. ET (1601 GMT), the Dow Jones industrial average was down 172.68 points, or 1.05 percent, at 16,243.9, the S&P 500 was down 24.27 points, or 1.27 percent, at 1,891.18 and the Nasdaq Composite index was down 95.73 points, or 2.12 percent, at 4,413.83.
Amazon's 5.1 percent fall weighed the most on the S&P and the Nasdaq, while Johnson & Johnson's 3.3 percent drop dragged the Dow.
Nine of the 10 major sectors were lower with the consumer discretionary index's 1.94 percent fall leading the decliners. The tech index was down 1.89 percent.
LinkedIn slumped 38.1 percent to $118.99, a day after the company's forecast missed estimates.
Tyson Foods was up 13.1 percent at $58.77 after the biggest U.S. meat processor raised its full-year profit forecast.
Tableau Software crashed to an all-time low of $40.04 after its disappointing forecast.
Declining issues outnumbered advancing ones on the NYSE by 2,047 to 813. On the Nasdaq, 1,932 issues fell and 608 advanced.
The S&P 500 index showed five new 52-week highs and 14 new lows, while the Nasdaq recorded two new highs and 107 new lows. (Reporting by Tanya Agrawal; Editing by Don Sebastian)