* U.S. non-farm payrolls easily tops expectations

* Dow up 0.2 pct, S&P up 0.04 pct, Nasdaq off 0.01 pct

By Chuck Mikolajczak

NEW YORK, March 8 (Reuters) - U.S. stocks were little changed on Friday as early enthusiasm, spurred by a much stronger-than-expected payrolls report, faded and bank shares declined as investors booked profits in the wake of the Federal Reserve's "stress tests" results.

Data showed hiring increased in February, with payrolls jumping by 236,000, easily beating expectations for a gain of 160,000 jobs. The unemployment rate fell to 7.7 percent, the lowest since December 2008.

"Great report - there just isn't anything that I can pull out negative at all about this report," said Darrell Cronk, regional chief investment officer for Wells Fargo Private Bank in New York.

"It is taking a little bit of this argument off the table that the Fed is doing all the heavy lifting in the economy, there is a trend building in the economic data that, while not off-the-charts-great, is definitely moving in the right direction."

But gains spurred by the rosy payrolls report were erased by a retreat in financial stocks, which had risen in advance of the Federal Reserve's stress test results. After the Fed said on Thursday, as expected, that the biggest U.S. banks had enough capital to withstand a severe economic downturn, investors locked in some of those recent gains, analysts said.

Having climbed more than 3 percent for the month, the S&P financial sector declined 0.3 percent. JPMorgan Chase , down 1.6 percent to $49.81, was the biggest drag on both the Dow and S&P 500.

"The banks have been leading for a while, the banks as a group are up sharply, yesterday they were up big in anticipation of those stress tests last night," said Ken Polcari, director of the NYSE floor division at O'Neil Securities in New York.

"The move already came, that is what people were expecting, so now these investors are deciding to take some profits."

The benchmark S&P index has advanced 1.8 percent in the week, its biggest weekly gain since the first week of the year, on data showing an improving labor market picture and expectations the Federal Reserve will not end its economic stimulus program soon.

The gains also sent the Dow Jones Industrial Average to a fourth consecutive intraday record high and put the S&P about 2 percent away from an all-time intraday high as investors have kept any dips contained by seizing the opportunity to buy.

Still, investors were mindful of the possibility of a bigger pullback after the steady gains this year, as the last correction for the benchmark S&P index was nearly a year ago - a 9.9 percent slide between April highs to the start of June.

The Dow Jones industrial average gained 28.74 points, or 0.20 percent, to 14,358.23. The Standard & Poor's 500 Index added 0.67 points, or 0.04 percent, to 1,544.93. The Nasdaq Composite Index dropped 0.43 points, or 0.01 percent, to 3,231.65.

Adding to the stream of positive economic data, wholesale inventories increased 1.2 percent to $504.4 billion after a revised 0.1 percent rise in December, the fastest pace of growth since December 2011.

McDonald's Corp gained 1.6 percent to $98.65 as the biggest boost to the Dow after the fast-food hamburger chain said February sales at established restaurants fell just 1.5 percent, a little better than expected.

Pandora Media shares jumped 17.2 percent to $13.75 on stronger-than-expected quarterly results. The company also said CEO Joseph Kennedy is stepping down in a surprise announcement.

SkullCandy Inc shares plunged 20.8 percent to $5.32 after the headphone maker said it expects to post a loss in the current quarter, even though fourth-quarter revenue was higher than expected.