* 227,000 jobs added in January vs est. 175,000
* Banks climb as Trump prepares to scale back Dodd-Frank
* Dow reclaims 20,000 for first time in four days
* Indexes up: Dow 0.84 pct, S&P 0.68 pct, Nasdaq 0.38 pct (Updates to early afternoon)
By Yashaswini Swamynathan
Feb 3 (Reuters) - Wall Street climbed higher on Friday, with the S&P 500 nearing its record high, fueled by robust nonfarm payrolls data and a rise in bank stocks on expectations of simpler regulations.
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.
Unemployment rate ticked up to 4.8 percent, still below the 5 percent level considered to be full employment. However, average hourly wages grew by only three cents or 0.1 percent.
"Continued strong job creation is tempered by the renewed sluggishness in wage growth, raising questions once again about the extent to which the functioning of the labor market has evolved," said Mohamed El-Erian, chief economic adviser at Allianz in Newport Beach, California.
"The sluggish wage growth will make the Fed more cautious about hiking in March."
Bank stocks gained as President Donald Trump prepared to sign orders to scale back the Dodd-Frank reform law, enacted in the wake of the 2007-2009 financial crisis.
The S&P 500 financial sector, already the best-performing index since Trump's election, was up 1.76 percent and was set for its best day since Nov. 14. The sharp rise had been powered by bets that Trump would usher in an era of simpler regulations.
"I like the rollback of Dodd-Frank," said Robert Pavlik, chief market strategist at Boston Private Wealth in New York. "It's a net-net win for the overall financial market because these rules and regulations have meant a big increase in costs for major banks and brokerage firms."
Citigroup, Bank of America, Goldman Sachs and JPMorgan were up between 2 percent and 3.6 percent.
At 12:18 p.m. ET (1718 GMT), the Dow Jones Industrial Average was up 167.98 points, or 0.84 percent, at 20,052.89, trading above the psychological 20,000 milestone for the first time in four days.
The S&P 500 was up 15.41 points, or 0.68 percent, at 2,296.26, just four points short of its all-time high.
The Nasdaq Composite was up 21.18 points, or 0.38 percent, at 5,657.38.
The gains helped the indexes erase almost all of the week's losses. The S&P and the Nasdaq are set to be little changed for the week, while the Dow is set to slip just 0.1 percent.
Amazon.com fell 3.3 percent to $812.06 after the world's largest online retailer forecast a surprise dip in operating profit for the current quarter. The stock was the biggest drag on the S&P 500 consumer discretionary index.
Macy's jumped 7 percent to $32.92 following a takeover approach from Canada's Hudson's Bay.
Advancing issues outnumbered decliners on the NYSE by 2,356 to 531. On the Nasdaq, 2,005 issues rose and 736 fell.
The S&P 500 index showed 22 new 52-week highs and six new lows, while the Nasdaq recorded 103 new highs and 17 new lows.
Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Sriraj Kalluvila