(Corrects first bullet to say "130,000 jobs", not "130,0000 jobs")
* U.S. economy adds 130,000 jobs in August
* Average hourly earnings gained 0.4%
* Stocks set for second straight week of gains
* Indexes up: Dow 0.31%, S&P 0.17%, Nasdaq 0.08%
By Uday Sampath Kumar
Sept 6 (Reuters) - U.S. stocks edged higher on Friday as a new Chinese stimulus plan helped ease some concerns around global growth, while investors digested underwhelming jobs data that rounded off a week of mixed economic signals.
Global markets inched higher after China's central bank said it would slash the amount of cash that banks must hold as reserves, releasing a total of 900 billion yuan ($126.35 billion) in liquidity.
Slower-than-expected payroll growth in August hinted at a slowing U.S. economy, helping cement expectations of an interest rate cut by the Federal Reserve later this month.
The Labor Department's nonfarm payroll data showed that the economy added 130,000 jobs in August, below expectations of a gain of 158,000, according to a Reuters survey of economists.
However, average hourly earnings gained 0.4% last month, the largest increase since February, raising hopes that healthy consumer spending could put inflation on track to meet the Fed's target.
"If the Fed is bent on becoming more dovish, the jobs data coming in shy of expectations feeds into that narrative and if they want to become more neutral, the wage inflation increasing above expectations strengthens that narrative," said Keith Buchanan, portfolio manager at Globalt in Atlanta.
"There's something to take for everyone from this report, not only among market participants but for those from within the Fed as well."
Market participants will keep a close watch on Fed Chairman Jerome Powell's speech at the University of Zurich later in the day for clues on monetary policy. They currently expect a quarter percentage point cut at the Fed's mid-September meeting.
Although U.S. markets kicked off the week on the back foot on poor August factory data, they were on track to end higher after being boosted by diffusing political tensions in Hong Kong and hopes of a de-escalation in U.S.-China trade tensions.
Strong growth in August private payrolls and an accelerating services sector also helped boost stocks to one-month highs later in the week. The benchmark S&P 500 rose 1.3% on Thursday and is now just 1.55% shy of its record high from July.
At 11:50 a.m. ET, the Dow Jones Industrial Average was up 82.27 points, or 0.31%, at 26,810.42, the S&P 500 was up 5.10 points, or 0.17%, at 2,981.10 and the Nasdaq Composite was up 6.70 points, or 0.08%, at 8,123.53.
The communication services sector was the biggest drag among the 11 major S&P sectors, pulled lower by Facebook Inc shares, which fell 1.9% after several U.S. state attorneys general said they would investigate the social media giant on whether it stifled competition and put users at risk.
Among stocks, Boeing Co and United Health rose about 1% and were the biggest boosts to the Dow.
Advancing issues outnumbered decliners by a 2.07-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 1.69-to-1 ratio on the Nasdaq.
The S&P index recorded 44 new 52-week highs and no new lows, while the Nasdaq recorded 47 new highs and 31 new lows. (Reporting by Uday Sampath in Bengaluru; Editing by Anil D'Silva)