* Nonfarm payrolls increase 211,000 in November
* Average hourly earnings increase 4 cents
* OPEC to continue pumping oil at current rates
* Nine of 10 S&P sectors higher, energy weak
* Indexes up: Dow 1.96 pct, S&P 1.81 pct, Nasdaq 1.83 pct (Updates prices, adds quote)
By Sweta Singh
Dec 4 (Reuters) - The Dow Jones industrial average rose about 2 percent on Friday, its biggest gain in three months, after U.S. jobs data suggested the economy was robust enough for the Federal Reserve to raise interest rates for the first time in nearly a decade.
The S&P 500 and the Nasdaq Composite were up about 1.8 percent in early afternoon trading.
Nine of the 10 major S&P 500 sectors were higher. The energy index was lower on news that OPEC countries failed to agree on oil production, allowing members to continue pumping oil at current rates into a market that is oversupplied.
Benchmark Brent oil futures and U.S. crude futures were down about 1.5 percent and energy stocks took a beating. Exxon was down 0.5 percent at $78.06, while Chevron fell 0.7 percent to $88.22.
Nonfarm payrolls increased 211,000 in November, the U.S. Labor Department reported, while September and October data was revised to show 35,000 more jobs than previously reported.
The unemployment rate held at a 7-1/2-year low of 5 percent, even as people returned to the labor force in a sign of confidence in the jobs market.
“Investors are looking at a potential of a Fed tightening as a glass half full. They are celebrating that the economy is strong enough to sustain higher interest rates,” Jack Ablin, chief investment officer at BMO Private Bank in Chicago, said.
Fed funds futures contracts showed that traders see about an 80 percent chance that the Federal Reserve will raise interest rates in December, up from 79 percent before the jobs report.
“At this point, I think (the Fed will) lose all credibility if they don’t raise (rates), absent some exogenous shock,” said Brad McMillan, chief investment officer at Commonwealth Financial Network in Waltham, Massachusetts.
The Fed’s policy-setting committee will meet on Dec. 15-16.
The closely watched employment report came a day after Fed Chair Janet Yellen struck an upbeat note on the economy when she testified before lawmakers, describing how it had largely met the criteria for a rate hike.
The S&P 500 suffered its biggest daily drop since late September on Thursday after the European Central Bank disappointed market hopes for a more aggressive economic stimulus program.
At 13:24 a.m. ET (1824 GMT) the Dow Jones industrial average was up 342.38 points, or 1.96 percent, at 17,820.05, the S&P 500 was up 37.11 points, or 1.81 percent, at 2,086.73 and the Nasdaq Composite was up 92.11 points, or 1.83 percent, at 5,129.64.
Financials were rallying, with 85 of the 87 stocks in the S&P financials index up.
JPMorgan Chase rose 2.3 percent to $67.33 after the European antitrust regulators dropped charges against the bank on blocking exchanges from derivatives markets.
Avon Products rose 10.3 percent to $4.40 after private equity investor group led by Barington Capital proposed a restructuring of the cosmetics maker.
Cooper Cos shares fell 8.5 percent to $130.03 after the medical device maker cut its 2016 outlook and reported a lower-than-expected quarterly profit.
Advancing issues outnumbered decliners on the NYSE by 1,971 to 998. On the Nasdaq, 1,786 issues rose and 955 fell.
The S&P 500 index showed 18 new 52-week highs and 19 new lows, while the Nasdaq recorded 51 new highs and 89 new lows. (Reporting by Sweta Singh in Bengaluru; Editing by Don Sebastian)