* June nonfarm payrolls up by 222,000 vs. est. 179,000
* Unemployment rate edges up to 4.4 pct from 4.3 pct in May
* Average hourly earnings rise 0.2 percent
* Futures up: Dow 42 pts, S&P 6.25 pts, Nasdaq 29 pts (Adds details, comment, updates prices)
By Tanya Agrawal
July 7 (Reuters) - U.S. stock index futures jumped on Friday after job growth surged more than expected in June, underscoring labor market strength that could keep the Federal Reserve on course for a third interest rate hike this year despite benign inflation.
Nonfarm payrolls increased by 222,000 jobs last month, data from the Labor Department showed, beating economists’ expectations for a 179,000 gain.
Average hourly earnings increased 0.2 percent in June after gaining 0.1 percent in May.
While the unemployment rate rose to 4.4 percent from a 16-year low of 4.3 percent, that was because more people were looking for work, a sign of confidence in the labor market.
“The topline number is quite strong. We saw positive revisions to the previous month and the average for this year is consistent with the average employment per month from last year,” said Michael Arone, chief investment strategist at State Street Global Advisors.
Investors are focused on wage growth and whether spending by consumers will be strong enough to back the Fed’s rate hike plans.
Odds of a rate hike at the Fed’s December meeting stood at 50.6 percent, according to the CME Group’s FedWatch tool.
Policymakers have taken opposing views on inflation after it retreated below the central bank’s 2 percent target in May, creating uncertainty over the future path of rate hikes.
Adding to the jitters are bets that the world’s major central banks are moving closer to unwinding their ultra-loose monetary policies.
Shares of banks including Bank of America, JPMorgan , Citigroup and Goldman Sachs rose about 0.4 percent in premarket trading.
Dow e-minis were up 42 points, or 0.2 percent, with 24,801 contracts changing hands at 8:39 a.m. ET (1239 GMT).
S&P 500 e-minis were up 6.25 points, or 0.26 percent, with 167,099 contracts traded.
Nasdaq 100 e-minis were up 29 points, or 0.52 percent, on volume of 33,505 contracts.
Oil fell more than 2 percent after data showed U.S. production rose last week just as OPEC exports hit a 2017 high. Oil prices are down more than 16 percent this year, adding to low inflation concerns.
U.S. stocks ended sharply lower on Thursday due to a steep fall in technology stocks and a disappointing private sector hiring report. Rising tensions in the Korean peninsula also added to the pressure.
Investors will also be watching for developments from the G20 summit, which is underway in Germany, with focus on President Donald Trump’s first meeting with Russian President Vladimir Putin.
Tesla rose 2.3 percent after the luxury electric carmaker won an Australian contract to install the world’s biggest grid-scale battery. Tesla’s shares have fallen about 15 percent this week following the company’s lower-than-expected deliveries. (Reporting by Tanya Agrawal in Bengaluru; Editing by Anil D‘Silva)