* May payrolls report shows pace of hiring remains solid
* Hertz Global falls, to restate financial results
* CBOE Volatility index at lowest level since Feb '07
* Indexes up: Dow 0.5 pct, S&P 0.5 pct, Nasdaq 0.6 pct (Updates to close)
By Angela Moon
NEW YORK, June 6 (Reuters) - U.S. stocks rose on Friday, with the Dow and the S&P 500 closing at records, after the May payrolls report provided the latest confirmation of improving economic conditions.
The CBOE Volatility index VIX, Wall Street's so-called fear gauge, ended down 8.1 percent at 10.73, its lowest level since February 2007.
The VIX, which tends to rise when volatility increases or the market drops, has been on the decline for months and is well below its historical average of 20, which some see as a sign that investors are ignoring concerns that could derail the rally.
The day's gains were broad and led by cyclical sectors, which outperform in times of economic expansion. Industrial shares jumped 1 percent while energy shares rose 0.8 percent. The only S&P 500 sector that fell was healthcare, a defensive group, down 0.1 percent.
About 217,000 jobs were added in May, slightly fewer than expected, while the unemployment rate held steady at 6.3 percent. This was the first time job growth has topped 200,000 for four consecutive months since January 2000.
While the report did not point to spectacular growth, "the main thing is that the world's biggest economy is moving in the right direction and slowly gathering momentum," said Marcus Bullus, trading director of MB Capital.
The Dow Jones industrial average rose 88.17 points or 0.52 percent, to 16,924.28, the S&P 500 gained 8.98 points or 0.46 percent, to 1,949.44 and the Nasdaq Composite added 25.17 points or 0.59 percent, to 4,321.40.
With the day's gains, the S&P 500 marked its sixth record close in the past seven sessions.
For the week, the Dow rose 1.2 percent, the S&P 500 rose 1.3 percent and the Nasdaq rose 1.9 percent.
Mining equipment maker Joy Global Inc jumped 3.9 percent to $64.11, building on its 6.7 percent rally on Thursday on the back on strong results, for its biggest weekly gain since August 2012.
Peabody Energy Corp was the biggest percentage decliner on the S&P 500, dropping 1.4 percent at $16.34 after Goldman Sachs downgraded the stock to "neutral."
Hertz Global Holdings Inc tumbled 9.1 percent to $27.73. The car rental company said it would restate financial results for the past three years to correct accounting errors.
Novavax Inc was the Nasdaq's most active stock, down 7.9 percent to $4.17 in heavy volume a day after a public offering of 25 million common shares was priced at a discount to its Thursday close.
Trading volume was around 5.27 billion shares on U.S. exchanges, below last month's average of 5.75 billion, according to data from BATS Global Markets. (Editing by Bernadette Baum)