* S&P 500 on track for biggest weekly decline of 2013
* Energy shares likely to drop, oil slumps 1 percent
* Futures down: Dow 125 pts, S&P 15.6 pts, Nasdaq 26.5 pts
By Ryan Vlastelica
NEW YORK, April 5 (Reuters) - U.S. stock index futures pointed to a drop of more than 1 percent at the open on Friday, following a payroll report that was much weaker than expected, the latest in a series of reports to indicate that economic growth may be losing momentum.
About 88,000 jobs were added in March, less than half the forecast 200,000, though the unemployment rate dipped to 7.6 percent from 7.7 percent.
The report follows similarly disappointing reads on the manufacturing and services sector, as well as other poor labor market data.
The data added to "concerns we had about prices having gotten ahead of themselves, which creates the potential for even further declines," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, Ohio.
The decline in futures indicates that equities will extend their recent retreat. The S&P is down 0.6 percent so far this week, on track to be its worst of 2013.
S&P 500 futures fell 15.6 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 (DJI: ^DJI - news) industrial average futures lost 125 points and Nasdaq 100 futures sank 26.5 points.
Weakness is expected in the retail names, as the SPDR S&P Retail exchange-traded fund was down 1.6 percent to $69.09 in premarket trading.
If the S&P closes down on the week, it will be only the third weekly loss this year for the benchmark index, which has struggled to surpass an intraday record high of 1,576.09. The index is up about 9.4 percent so far this year and has so far gone without a significant pullback, leading many to call for one.
The gains have been partially fueled by a bond-buying program by the Federal Reserve, which has been credited with supporting equity prices. Measures from central banks around the world have also helped, and on Thursday, Wall Street rose after the Bank of Japan announced aggressive policies to jump-start its economy.
The payroll report "should reinforce the Fed's recent bond buying activity; but that may not be enough to turn today's bearish feelings in the markets," said Todd Schoenberger, managing partner at LandColt Capital in New York.
Energy shares are likely to be pressured, as the group is closely tied to economic growth expectations. Crude oil fell for a third straight day, dropping 1.1 percent and extending its decline for the week to more than 5 percent. Chevron Corp has lost 2.6 percent over the past two weeks.
Overseas, European shares slumped 1.7 percent, falling to a one-month low on concerns over growth.
Earnings forecasts have declined heading into first-quarter reports, due to be kicked off next week by Alcoa (NYSE: AA - news) . S&P 500 earnings are expected to have risen just 1.6 percent from a year ago, according to Thomson Reuters data, down from 4.3 percent forecast in January.
Late Thursday, F5 Networks Inc forecast second-quarter earnings and revenue that were well below expectations. Its shares slumped 17 percent to $74.65 in premarket trading.
Geopolitical tensions will remain in focus after North Korea placed two of its intermediate range missiles on mobile launchers and hid them on the east coast of the country, South Korean media reported on Friday.