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* 227,000 jobs added in January, above 175,000 estimate
* Dow reclaims 20,000 level for first time in four days
* Financials on track for best day in 2-1/2 months
* Indexes up: Dow up 0.86 pct, S&P 500 up 0.66 pct, Nasdaq up 0.38 pct (Updates to mid-afternoon, changes byline)
By Chuck Mikolajczak
NEW YORK, Feb 3 (Reuters) - Wall Street stocks climbed on Friday, with the S&P 500 nearly topping its record high, boosted by gains in financial shares as President Donald Trump moved ahead with deregulation action and a strong payrolls report.
The S&P financial sector jumped 1.9 percent and was on pace for its best day since mid-November after Trump signed an executive order to scale back regulations in the industry that were implemented in the wake of the financial crisis.
JP Morgan Chase shares were up 2.8 percent at $87.00 as the biggest boost to the S&P 500 and helped push the S&P bank index up 2.5 percent.
The U.S. public and private sectors created 227,000 jobs last month, according to the Labor Department, far more than the 175,000 economists had expected.
The unemployment rate ticked up to 4.8 percent while average hourly wages grew by only three cents or 0.1 percent, which is likely to keep the Federal Reserve on a gradual path to raise U.S. interest rates.
"People seem to be more focused naturally on what new policies may be coming to the equity markets," said Sean Lynch, co-head of global equity strategy at Wells Fargo Investment Institute in Omaha, Nebraska.
"You put the jobs number back in the drawer and say it is slightly ahead and now people are going to be excited about what (Trump) is saying about Dodd-Frank."
The financial sector has rocketed up more than 18 percent since the Nov. 8 election while the bank sector has surged more than 25 percent on expectations Trump would scale back regulations.
The Dow Jones Industrial Average rose 168.67 points, or 0.85 percent, to 20,053.58, the S&P 500 gained 14.93 points, or 0.65 percent, to 2,295.78 and the Nasdaq Composite added 20.34 points, or 0.36 percent, to 5,656.54.
Friday's gains helped the indexes recoup most, if not all, of the losses from earlier in the week. The S&P and the Nasdaq were holding near the unchanged mark, while the Dow is set to slip just 0.2 percent.
Amazon.com fell 3.4 percent to $811.27 after the world's largest online retailer forecast a surprise dip in operating profit for the current quarter. The stock pulled the S&P 500 consumer discretionary index down -0.1 as the only major S&P sector in negative territory for the session.
Macy's jumped gained 5.3 percent to $32.35 following a takeover approach from Canada's Hudson's Bay.
Advancing issues outnumbered declining ones on the NYSE by a 3.71-to-1 ratio; on Nasdaq, a 2.50-to-1 ratio favored advancers.
The S&P 500 posted 23 new 52-week highs and six new lows; the Nasdaq Composite recorded 115 new highs and 19 new lows. (Reporting by Chuck Mikolajczak; Editing by James Dalgleish)