NEW YORK (REUTERS) - Wall Street opened higher on Friday after data showed US employment growth slowed more than expected in August, which could rule out an interest rate increase this month.

The Labor Department's monthly jobs report showed nonfarm payrolls rose by 151,000 last month, while the unemployment rate remained unchanged at 4.9 per cent.

Economists polled by Reuters had forecast payrolls rising 180,000 last month.

Rate hike probabilities for September and December had risen after last Friday's remarks by Fed Chair Janet Yellen that the case for raising rates had strengthened in recent months. The Fed next meets on Sept. 20-21.

"I don't think this is the kind of report that the Fed wanted to see ahead of a hike in September, the contours are just too squishy. This should put to rest the conversation on September," said Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York.

The odds of a rate hike in September stood at a measly 12 per cent, according to CME Group's FedWatch tool. The measure stood at 24 per cent before the jobs report was released.

With the labour market near full employment, a slowdown in job growth is normal. Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with population growth.

At 9:40 a.m. ET (9:40 p.m Singapore time), the Dow Jones industrial average was up 96.84 points, or 0.53 per cent, at 18,516.14, the S&P 500 was up 10.1 points, or 0.47 per cent, at 2,180.96 and the Nasdaq Composite was up 19.12 points, or 0.37 per cent, at 5,246.32.

All 10 major S&P sectors were higher, with the energy index's 0.90 percent rise leading the advancers.

Oil prices rose about 2 per cent after the jobs report weighed on the dollar.

Banks, which benefit from higher interest rate, fell in early trading.