(For a Reuters live blog on U.S., UK and European stock

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Weekly jobless claims at 225,000

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US service sector activity accelerates to 1-1/2-year high

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Levi Strauss tumbles after saying it is exploring unit

sale

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East, Gulf coast workers' strike enters third day

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Indexes: Dow down 0.38%, S&P 500 off 0.06%, Nasdaq up

0.13%

(Updated at 11:49 a.m. ET/1549 GMT)

By Johann M Cherian and Purvi Agarwal

Oct 3 (Reuters) - Wall Street's main indexes were mixed

in volatile trading on Thursday as investors remained cautious

ahead of a crucial labor report later in the week and monitored

potential escalations in Middle East hostilities.

The benchmark S&P 500 briefly turned positive after the

Institute for Supply Management survey showed U.S. service

sector activity jumped to a one-and-a-half-year high in

September, further evidence that the economy stayed robust in

the third quarter.

However, separate data showed weekly jobless claims rose

marginally last week. Next up is the nonfarm payrolls report for

September, due on Friday.

Odds of a 25-basis-point cut at the Federal Reserve's

November meeting now stand at 65.6%, up from 50.7% a week ago,

according to the CME Group's FedWatch Tool.

The Dow Jones Industrial Average fell 159.10 points,

or 0.38%, to 42,037.42, the S&P 500 lost 3.18 points, or

0.06%, to 5,706.36 and the Nasdaq Composite gained 24.18

points, or 0.13%, to 17,949.30.

The CBOE volatility index, Wall Street's fear gauge

, hovered at more than three-week highs at 19.75.

Eight of the 11 S&P 500 sectors were lower. However,

Energy was the biggest gainer with a 0.9% rise.

Investors have been wary over the last two sessions as they

contemplated the scale of Israel and the United States' response

to Iran's recent attack on Israel.

Concerns of supply disruptions in the region pushed oil

prices up by more than 2%. Oil stocks such as Chevron ( CVX )

and Exxon Mobil ( XOM ) edged higher after four sessions of

gains.

Meanwhile, a workers' strike on the East and Gulf coasts

entered its third day. Morgan Stanley economists said a

prolonged stoppage could raise consumer prices, with food prices

likely to react first.

"Market participants have three things on their mind right

now: tensions in the Middle East, how long will the

longshoremen's strike last and does that have inflationary

implications," said Art Hogan, chief market strategist at B

Riley Wealth.

"The third thing is, what does the pace of economic

growth look like (and) that will manifest itself in tomorrow's

job numbers."

Rate-sensitive heavyweights were also mixed, with

Amazon.com ( AMZN ) down 1.1%, Tesla losing 1.9%, while

Nvidia ( NVDA ) rose 3.5%.

Yields on two-year and 10-year Treasury bonds

inched higher and were last up 3.688% and 3.819%,

respectively.

U.S. stocks have rallied for much of the year, with the

benchmark S&P 500 confirming a bull rally and logging

gains in eight of the previous nine months on expectations of

lower borrowing costs. Tech stocks led the charge,

with AI integration expected to boost their earnings.

Among other movers, Levi Strauss slid 7.4% after

the company said it was considering a sale of its

underperforming Dockers brand and forecast fourth-quarter

revenue below expectations.

Constellation Brands ( STZ ) dropped 2.3% after the beer

maker maintained its sales and profit forecast for fiscal year

2025.

Declining issues outnumbered advancers by a 2.24-to-1

ratio on the NYSE, and by a 1.75-to-1 ratio on the Nasdaq.

The S&P 500 posted 20 new 52-week highs and two new

lows, while the Nasdaq Composite recorded 47 new highs and 86

new lows.