An unexpected rise in the U.S. unemployment rate is pushing stocks down as investors move money into safer assets.

The government reported that the unemployment rate climbed to 9.8 percent in November, a seven-month high. That's up from 9.6 percent the previous month. Employers added 39,000 jobs. Economists had forecast a gain of 145,000.

The Dow Jones industrial average is down 25, or 0.2 percent, to 11,337.

The S&P 500 index is down 4, or 0.3 percent, to 1,217. The Nasdaq composite index is off 1.51, or 0.1 percent, to 2,577.

The yield on the 10-year Treasury note is down to 2.96 percent from 3.00 percent late Thursday. That yield helps set interest rates on many loans, including home mortgages.

U.S. short-term interest rate futures traders boosted bets the Federal Reserve will wait until mid-2012 before raising rates, after a government report showed the U.S. jobless rate unexpectedly rose in November.

Friday's report showed the unemployment rate rose to 9.8 percent. Economists had expected a rate of 9.6 percent.

Futures traders now are not fully pricing in an increase in the target rate for overnight lending between banks until May 2012, trading in federal funds futures at CME Group Inc's Chicago Board of Trade shows.

The Fed, which has kept short-term interest rates near zero for the past two years, last month embarked on a new round of Treasury buying to push borrowing costs down further in order to boost the economy and jobs.

Encouraged by recent stronger economic data, traders had been speculating the Fed might curtail its $600 billion Treasury debt purchase program, known as quantitative easing. Before the report they had been pricing in a better-than-even chance of a rate rise by December, 2011.

They backed off those bets after the jobs report, reflecting the view that the Fed may need to keep rates lower for longer to nurture what is still a fragile recovery.

"A softer-than-expected jobs number probably makes people a little more comfortable with the idea that the Fed will steadily progress with its planned quantitative easing," said Nick Bennenbroek, a currency strategies with Wells Fargo in New York.

Broad stock indexes fell sharply in midday trading as concerns grew that the European financial crisis will spread.

Ireland formally asked for help from its neighbors over the weekend after falling into a financial crisis brought on by losses at the three banks the country nationalized. Details of the loan package were still being worked out, but Irish Finance Minister Brian Lenihan has said the rescue would not exceed euro100 billion ($137 billion).

It was the second time that the European Union has come to the rescue of one of the 16 countries that use the euro. In May, the EU and the IMF committed $140 billion to Greece to prevent the country from defaulting on its debt. Euro zone members have been willing to prop up each other's finances in hopes of avoiding a financial crisis that could cause the value of the euro to plummet.

Ireland's request initially pushed stocks higher in Europe. But the Euro Stoxx 50, an index of blue chip companies in countries that use the euro, fell 0.6 percent in afternoon trading there.

The Dow Jones industrial average was down almost 90 points in midday trading.

Ireland's request for assistance does not put an end to the questions facing the euro zone. Fellow members Spain, Portugal and Italy are also saddled with heavy debt burdens and investors fear that they may also need a financial lifeline from other EU members. The euro fell 0.8 percent against the dollar.

"It's been difficult for the European Union to get ahead and stay ahead of the market's concerns, despite the large sums they are clearly willing to dedicate," said Robert Tipp, the chief investment strategist for Prudential Fixed Income. Ireland's announcement that it would seek assistance contributed to stock losses because it was not detailed enough to restore investor confidence, he said.

Doubts about the central bank's ability to expand its bond-buying program have driven Treasury yields higher.

Criticism of the Federal Reserve's latest bond-buying program, both from insiders and from U.S. politicians, is muting the plan's potential benefits for the economy.

Amid widely publicized skepticism about the efficacy and wisdom of the bond buying, investors and traders are questioning whether the Fed would be able to expand its bond purchases beyond $600 billion—even if inflation continues falling and unemployment remains high. Those doubts have contributed to an increase in yields on U.S. Treasury bonds since the Fed announced the program on Nov. 3, they say.

The criticism "has raised questions about the Fed's ability and resolve to control the yield curve," said Mohamed El-Erian, chief executive and co-chief investment officer of Pimco, the bond-fund giant. "The criticism has unsettled markets naturally inclined to worry about the politicization of the Fed and its loss of autonomy," he said.

The success of the latest round of quantitative easing, or QE2 as it is known, hinges on shaping public and market expectations. The more the public and investors believe the Fed is likely to keep buying bonds to depress long-term interest rates until the economy comes back, the more likely the markets are to keep long-term rates from rising.

Communicating a willingness to do more bond buying if needed despite dissent from inside the Fed and political pressure, primarily from Republican politicians and their advisers, is proving a challenge for Fed Chairman Ben Bernanke and a policy-setting committee with a diverse set of views.

Consumer prices rose moderately in October but there was little sign of inflation as the cost of autos, clothing and hotels fell.

The Consumer Price Index rose 0.2 percent last month, the Labor Department said, mostly due to higher gas prices.

But excluding the volatile energy and food categories, the core index was unchanged for the third straight month. In the past year, core prices have risen by only 0.6 percent, the smallest annual rise since the index began in 1957.

The weak economy is keeping a lid on prices. Consumers, facing high unemployment and slow wage growth, are restraining their spending. Retailers and other companies don't want to risk losing frugal shoppers by raising prices.

The report provides support for the Federal Reserve's recent moves to boost the economy. The central bank said earlier this month that it would buy $600 billion in Treasury bonds in an effort to lower interest rates and spur more borrowing and spending.

That decision has come under extensive criticism. Many leading Republican economists said earlier this week that the Fed's actions risk triggering runaway inflation.

But several economists said Wednesday's report shows that concerns about inflation are misplaced.

"Fears about a potential outbreak of inflation from the Fed's recent moves are massively overblown and are completely out of sync with the reality of extremely competitive markets for ... products and services," said Brian Bethune, an economist at IHS Global Insight.