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US STOCKS-Wall St loses ground as Trump's positive COVID-19 test adds to uncertainties

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* Stocks pare losses on White House reassurances, stimulus hopes

* U.S. jobs growth slows more than expected in September

* Airline gain on news of possible new aid package

* Indexes down: Dow 0.37%, S&P 0.83%, Nasdaq 2.00% (Updates to mid-afternoon, changes dateline, byline)

NEW YORK, Oct 2 (Reuters) - The S&P 500 was lower on Friday as news that U.S. President Donald Trump tested positive for COVID-19 put investors in a risk-off mood and added to mounting uncertainties surrounding the looming election.

All three major U.S. stock indexes were sharply lower earlier in the session, but pared losses after the White House provided assurances that Trump is not incapacitated, and rebounded further following U.S. House of Representatives Speaker Nancy Pelosi’s announcement that an agreement to provide another $25 billion in government assistance to the airline industry was “imminent.”

All three were lower, but the blue-chip Dow’s losses were mitigated by gains in economically sensitive cyclical stocks.

Trump tweeted late Thursday that he had contracted the coronavirus and would be placed under quarantine, compounding the unknowns for an already volatile market.

“This could shift the landscape,” said Oliver Pursche, president of Bronson Meadows Capital Management in Fairfield, Connecticut. “It’s one more insecurity heading into a tight, contentious election.”

Data released on Friday showed the recovery of the labor market could be losing steam. The U.S. economy added 661,000 jobs in September, fewer than expected and the slowest increase since the recovery began in May.

Payrolls remain a long way from regaining the 22 million jobs lost since the initial shutdown, and the ranks of the permanently unemployed are swelling.

The Dow Jones Industrial Average fell 102.01 points, or 0.37%, to 27,714.89, the S&P 500 lost 28.19 points, or 0.83%, to 3,352.61 and the Nasdaq Composite dropped 226.18 points, or 2%, to 11,100.33.

Eleven major sectors in the S&P 500, tech suffered the largest loss, while energy and industrials enjoying the biggest percentage gains.

In a reversal from recent sessions, market leaders Apple Inc , Microsoft Corp and Amazon.com were down, providing the heaviest weight on the S&P and the Nasdaq.

Commercial air carriers rose on news off a possible new round of government aid, with the S&P 1500 Airline index rising 1.7%.

Tesla Inc shares fell 6.3% after the electric car maker’s third quarter vehicle deliveries, while reaching a new record, underwhelmed investors.

House Democrats passed a $2.2 trillion fiscal aid package on Thursday, but the bill is unlikely to be approved in the Republican-controlled Senate.

Partisan wrangling over the size and details of a new round of stimulus have stalled, over two months after emergency unemployment benefits expired for millions of Americans.

Advancing issues outnumbered declining ones on the NYSE by a 1.34-to-1 ratio; on Nasdaq, a 1.15-to-1 ratio favored decliners.

The S&P 500 posted five new 52-week highs and one new lows; the Nasdaq Composite recorded 50 new highs and 26 new lows. (Reporting by Stephen Culp Editing by Marguerita Choy)

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