May 2 (Reuters) - U.S. job growth slowed marginally in April, but the outlook for the labor market is increasingly darkening as President Donald Trump's aggressive tariff policy heightens economic uncertainty.

Nonfarm payrolls increased by 177,000 jobs last month after rising by a downwardly revised 185,000 in March, the Labor Department said on Friday.

Economists polled by Reuters had forecast 130,000 jobs added last month after a previously reported 228,000 advance in March.

The unemployment rate held steady at 4.2%. It is too early for the labor market to show the impact of Trump's on-and-off again tariffs policy. Amid the uncertainty, the Federal Reserve is expected to keep benchmark interest rates in the 4.25%-4.50% range next week. Economists expect companies will reduce hours before resorting to mass layoffs.

MARKET REACTION:

STOCKS: S&P 500 E-minis EScv1 added to gains and were up 0.85%, pointing to a solid open on Wall Street

BONDS: The yield on benchmark U.S. 10-year notes US10YT=RR rose to 3.2676%, the two-year note yield US2YT=RR rose to 3.744% FOREX: The dollar index =USD pared a loss and was 0.30% lower, while the euro EUR=EBS extended 0.27% higher

COMMENTS:

BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN

"Employment is holding in there, but manufacturing is feeling the pinch. The diffusion index for manufacturing - related to how many industries are growing versus shrinking - has dropped to 42. It’s back to the muddy recessionary conditions for manufacturing. In April there was a big jump in hours worked in retail and transportation as people made their last ditch efforts to buy goods before prices adjusted."

LINDSAY ROSNER, HEAD OF MULTI SECTOR FIXED INCOME INVESTING, GOLDMAN SACHS ASSET MANAGEMENT (emailed comments)

“Strong jobs data puts a spring in the Fed’s step. Despite an increasingly uncertain economic backdrop, the US labor market remained resilient in April with employment surprising to the upside and the unemployment rate remaining steady. In the here and now, solid labor market data provides the Fed with scope for patience. With the forward-looking outlook having deteriorated, however, today’s data feels somewhat backward looking and the risks remain that a weakening economy could see the Fed resume its easing cycle later in the year.”

(Compiled by the Global Finance & Markets Breaking News team)

((alden. bentley@thomsonreuters.com; 646-281-6041;))