* 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 pct vs est 0.3 pct
* Indexes up: Dow 0.23 pct, S&P 0.27 pct, Nasdaq 0.45 pct (Updates to open)
By Tanya Agrawal
July 7 (Reuters) - Wall Street was higher on Friday after the U.S. economy created far more jobs than expected in June, underscoring labor market strength that could make the case 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 rose 0.2 percent in June after gaining 0.1 percent in May, but fell below the estimated 0.3 percent.
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.
At 9:33 a.m. ET (1333 GMT), the Dow Jones Industrial Average was up 49.53 points, or 0.23 percent, at 21,369.57, the S&P 500 was up 6.67 points, or 0.27 percent, at 2,416.42.
The Nasdaq Composite was up 27.33 points, or 0.45 percent, at 6,116.80.
Ten of the 11 major S&P sectors were higher, with the tech index’s 0.49 percent rise leading the gainers. The financial index rose 0.47 percent.
Shares of Bank of America, JPMorgan, Citigroup and Goldman Sachs rose about 0.8 percent in premarket trading.
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.
The energy sector fell 0.2 percent and was the only laggard.
Tesla edged up 0.8 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.
Advancing issues outnumbered decliners on the NYSE by 1,468 to 943. On the Nasdaq, 1,366 issues rose and 676 fell. (Reporting by Tanya Agrawal in Bengaluru; Editing by Anil D‘Silva)