* Payrolls top expectations, unemployment hits 5-yr low
* J.C. Penney, Barnes & Noble shares fall on SEC inquiries
* Indexes up: Dow 1.1 pct, S&P 500 1.1 pct, Nasdaq 0.8 pct
By Rodrigo Campos
NEW YORK, Dec 6 (Reuters) - U.S. stocks rose on Friday aftera stronger-than-expected payrolls report gave traders confidencethat the economy could be healthy enough to withstand a scalingback of the Federal Reserve's stimulus.
The S&P 500 was having its best day in nearly a month andwas approaching a ninth consecutive week of gains despite endinglower in recent days.
Nonfarm payrolls added 203,000 in November, exceeding theforecast, and the U.S. unemployment rate fell to a five-year lowof 7.0 percent. The Labor Department's report raised theprospects that the Fed would begin to taper its stimulus programsooner rather than later.
Economic data for the fourth quarter so far has been mixed,with indicators for the labor market and consumer spendingshowing strength but the housing market and business spendingfaltering.
"The economy is still not generating the levels of inflationthe Fed would like to see, so that may give them a little spaceto maneuver," said Cam Albright, director of asset allocation atWilmington Trust Investment Advisors in Wilmington, Delaware.
"I don't think (the payrolls data) backs the Fed into thecorner that they have to taper in December."
Many market participants have expected the Fed to announce acut in stimulus in March. The Fed has said it would slow itsmassive bond purchases when certain economic measures meet itstargets, including a drop in the U.S. unemployment rate.
The Dow Jones industrial average rose 178.27 pointsor 1.13 percent, to 15,999.78, the S&P 500 gained 19.17points or 1.07 percent, to 1,804.2 and the Nasdaq Composite added 31.958 points or 0.79 percent, to 4,065.123.
The S&P was posting its best day since Nov. 8 and the Dow'sgain was the largest since Oct. 16.
After an eight-week run that pushed the S&P 500 up nearly 7percent, the benchmark index had dropped 1.2 percent over thepast five sessions, its longest losing streak since lateSeptember.
Intel ranked among the top gainers on the S&P 500index, with its shares up 2.9 percent at $24.98 after Citigroupraised its rating on the chipmaker to "buy" from "neutral."
J.C. Penney shares fell 6.3 percent to $8.29 afterthe department store chain said it received a letter of inquiryfrom the U.S. Securities and Exchange Commission, seeking anexplanation on the company's financial position.
Barnes & Noble also disclosed an SEC investigation,and its stock fell 7.6 percent to $15.15.
Other data showed personal spending rose 0.3 percent inOctober, slightly higher than expected. The ThomsonReuters/University of Michigan's preliminary reading on theoverall index on consumer sentiment jumped to 82.5 for Decemberfrom a final November reading of 75.1.
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