US STOCKS-Futures edge higher ahead of nonfarm payrolls report

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* Futures up: Dow 0.10%, S&P 0.22%, Nasdaq 0.35%

By Devik Jain

Jan 7 (Reuters) - U.S. stock index futures edged higher on Friday ahead of a closely watched jobs report, with an index of economy-linked value shares on track for its third straight weekly gain.

The Labor Department's report, due at 08:30 a.m. ET, is expected to show U.S. employment growth likely picked up last month, culminating in record job creation in 2021. The unemployment rate is also seen falling to a 22-month low of 4.1% from 4.2% in November.

Economists surveyed by Reuters expect nonfarm payrolls to increase by 400,000 jobs in December after rising 210,000 in November.

The data comes after minutes from the Federal Reserve's December meeting signaled the central bank may have to raise interest rates sooner than expected amid a "very tight" job market and unabated inflation.

The hawkish tone spurred a rally in U.S. Treasury yields while prompting investors to swap technology-heavy growth shares with more cyclical parts of the market such as energy, financials and industrials that tend to do better in a high interest-rate environment.

"A stronger-than-expected (jobs) number might add to the impression given by the recently released minutes of the Fed's latest meeting that rates are set to rise further and faster in the short term and provide another jolt to markets," Russ Mould, investment director at AJ Bell, wrote in a client note.

Fed funds futures imply an 80% chance of a 25-basis point tightening at the March Fed meeting, and at least three rate hikes by the end of the year.

Shares of Occidental Petroleum and Citigroup (C) rose 1.5% and 0.8%, respectively, in premarket trading, leading gains among major oil and banking companies.

The S&P 500 energy sector, which has gained 9% so far this week, was set for its best weekly rise in ten months. The broader value index added 0.8% this week, outperforming its growth counterpart, which is eyeing its worst week since late February 2021.

At 6:43 a.m. ET, Dow e-minis were up 36 points, or 0.1%, S&P 500 e-minis were up 10.5 points, or 0.22%, and Nasdaq 100 e-minis were up 54.75 points, or 0.35%.

All the three major Wall Street indexes are set for a weekly fall.

Mega-cap tech titans Apple Inc (AAPL), Microsoft Corp (MSFT) , Amazon.com Inc and Tesla Inc (TSLA) were up between 0.6% and 1.5%, nursing some steep losses suffered this week.

GameStop Corp (GME) jumped 16.9% after the video game retailer and "meme stock" said it is launching a division to develop a marketplace for nonfungible tokens (NFTs) and establish cryptocurrency partnerships.

Starbucks Corp (SBUX) fell 1.7% after RBC downgraded the specialty coffee retailer's stock to "sector perform" from "outperform". (Reporting by Devik Jain in Bengaluru; Editing by Maju Samuel)