US STOCKS-Wall St falls on soaring oil, jobless rate

(Updates to midmorning)

*Major indexes fall more than 1 percent

*Soaring oil, unemployment rate weigh on market

*Energy stocks are biggest gainers

By Walker Simon

NEW YORK, June 6 (Reuters) - Wall Street stocks fell on Friday after the U.S. unemployment rate recorded its sharpest rise in 22 years and oil prices soared nearly 4 percent to within sight of its all-time high.

Financial and technology stocks led declines as investors fled the sectors particularly sensitive to economic cycles as the unemployment rate and oil's rebound renewed worries the United States may tip into a recession.

Insurer American International Group (AIG.N)> and credit card company American Express Co (AXP.N) (AXP.N) both fell more than 4 percent. In technology, IBM (IBM.N) fell 1.4 percent and Microsoft Corp (MSFT.O) was off 1.3 percent.

"We have a double whammy this morning: soaring oil prices and economic news of the jump in the unemployment rate," said Victor Pugliese, director of listed equity trading at Broadpoint Securities in San Francisco.

"I would assume we are going to see a significant down market the next day or two," he added,

The Dow Jones industrial average .DJI was down 221.87 points, or 1.76 percent, at 12,382.58. The Standard & Poor's 500 Index .SPX was down 19.63 points, or 1.40 percent, at 1,384.42. The Nasdaq Composite Index .IXIC was down 36.31 points, or 1.42 percent, at 2,513.63.

The unemployment rate rose in May to 5.5 percent, its highest since October 2004, the Labor Department said. For details, see [ID:nN06467327]. The jump from 5 percent in April was the biggest rise in the jobless rate in 22 years. The department said the economy shed non-farm payroll jobs for a fifth straight month.

Oil soared by more than $6 a barrel above $134, bringing gains in the last two days to $12 as the dollar weakened on the U.S. jobless rate. Later, U.S. crude futures CLc1 pared gains to $133.33 a barrel. Oil set a record high on May 22 of $135.09.

AIG fell to $34.77. American Express dropped to $45.30. IBM was down to $126.70 and Microsoft fell to $28.95.

On the positive side, chip maker National Semiconductor Corp (NSM.N) rose more than 7 percent to $24.28 after it posted revenues and per-share earnings that topped expectations.

Among big oil companies, Chevron Corp (CVX.N) added 1.8 percent to $101.85 and rival Exxon Mobil (XOM.N) rose rose 0.9 percent to $89.98. (Editing by Kenneth Barry)