* December payrolls much lower than expected
* Alcoa shares slide after results
* Futures up: Dow 41 pts, S&P 5 pts, Nasdaq 11 pts
NEW YORK, Jan 10 (Reuters) - U.S. stocks were set to rise slightly at the open on Friday even as the December jobs report came in much weaker than anticipated.
Equity futures sharply pared gains after data showed U.S. employers hired in December only 74,000 workers, the smallest increase since January 2011.
"That's what markets do," said John Canally, investment strategist and economist for LPL Financial in Boston.
"You have a bunch of traders sitting there looking at a number they don't know anything about, they see a weak number and they hit 'sell'; and when people take a look through it again they will reconsider."
The data setback was likely to be temporary, however, amid signs that cold weather conditions might have had an impact.
"It looks like it's a weather issue," Canally said. "The Fed will see through it as a weather issue. I don't think they will change after one month of anything bad or good - so they are going to stay the course."
Investors are still viewing economic data through the eyes of the Federal Reserve, trying to gauge the pace at which it will continue to reduce its monthly stimulus.
After the post-data drop, S&P 500 futures rose 5 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures rose 41 points and Nasdaq 100 futures added 11 points.
At their session high, S&P futures rose more than 9 points.
Alcoa reported a massive quarterly loss on Thursday after recent declines in aluminum prices; its shares fell 6.6 percent in premarket trading.
Sears Holdings Corp's shares fell 11.6 percent in light premarket trading a day after the retailer reported steep declines in comparable-store sales at its Kmart and U.S. namesake chain for the crucial holiday season.
Shares of trucking company YRC Worldwide fell 21.5 percent in premarket trading a day after sliding 16 percent after workers represented by the Teamsters union rejected a contract extension that the company proposed, putting a plan to restructure its debt in jeopardy.
Target Corp said a massive payment card data breach that occurred during the first three weeks of the holiday shopping season affected up to 70 million people, far more than previously estimated. Its shares fell 1.3 percent premarket.