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US STOCKS-Wall Street climbs after upbeat payrolls report

* Payroll data tops expectations

* J.C. Penney gets letter of inquiry from SEC

* Sears Holdings to spin off Lands' End business

* Indexes up: Dow 0.84 pct, S&P 0.86 pct, Nasdaq 0.60 pct

By Chuck Mikolajczak

NEW YORK, Dec 6 (Reuters) - U.S. stocks climbed on Friday, putting the S&P 500 on track to halt a five-session losing streak, in the wake of a stronger-than-expected payrolls report.

Nonfarm payrolls increased by 203,000 new jobs last month and the jobless rate fell to a five-year low of 7.0 percent. Economists polled by Reuters had forecast payrolls rising 180,000 last month and the unemployment rate falling to 7.2 percent from 7.3 percent.

After an eight-week run that saw the S&P 500 climb nearly seven percent, the benchmark index had dropped 1.2 percent over the past five sessions, its longest losing streak since late September, as encouraging economic data increased expectations the Fed may soon trim its $85 billion in monthly bond purchases.

Many market participants have expected the Fed to announce a cut in stimulus in March. The Fed has said it would slow its massive bond purchases when certain economic measures meet its targets, including a decline in the U.S. unemployment rate. The payrolls report Friday may help gird expectations the economy would be able to support a Fed wind-down of stimulus.

"I don't think the Fed is in a big rush to do anything drastic in the absence of inflation. A few strong jobs numbers do not mean we are out of the woods," said Michael Marrale, head of research, sales and trading at ITG in New York.

"That said, we are in a very good spot and we can offset growth with tapering and we come out of this in one piece."

Other data showed consumer spending increased 0.3 percent in October after rising 0.2 percent in September. Economists polled by Reuters had expected consumer spending, which accounts for about 70 percent of U.S. economic activity, to gain 0.2 percent in October.

The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment jumped to 82.5 for December, up from a final reading of 75.1 in November. This was the highest reading for the index since July, and topped analyst forecasts for a reading of 76.

The Dow Jones industrial average rose 133.09 points, or 0.84 percent, to 15,954.6, the S&P 500 gained 15.35 points, or 0.86 percent, to 1,800.38 and the Nasdaq Composite added 24.247 points, or 0.6 percent, to 4,057.412.

J.C. Penney Co Inc fell 4.4 percent to $8.46 after the department store chain said it received a letter of inquiry from the U.S. Securities and Exchange Commission, seeking an explanation on the company's financial position.

Struggling retailer Sears Holdings Corp, led by hedge fund manager Edward Lampert, rose 1.8 percent to $50.89 after the company said it would spin off its Lands' End clothing business.