* Initial jobless claims climb to 8-mth high
* Energy leads losses for 4th day
* Dow off 0.3 pct, S&P off 0.2 pct, Nasdaq up 0.3 pct (Updates to midday, changes byline)
By Caroline Valetkevitch
NEW YORK, May 5 (Reuters) - The Dow and S&P 500 dipped on Thursday after a weak labor market report, but losses were capped as a steep drop in oil prices was seen helping consumers.
Fueling fears about the strength of the economic recovery, data showed U.S. initial jobless claims rose to an eight-month high last week.
The S&P was on its way to a fourth day of losses, adding to worries about the sustainability of an eight-month rally.
While a big declines in crude oil and other commodities pushed down related shares, it eased worries about the impact of energy prices on consumers.
"It looks like it's an unwinding of the risk trade," said Fred Dickson, chief market strategist at D.A. Davidson & Co in Lake Oswego, Oregon.
Lower oil, "means the tax on consumers should come down a bit," he said.
The S&P energy index was down 1.1 percent, leading losses for a fourth day on the S&P. Brent crude and U.S. crude futures both slid more than 6 percent.
The economic news added to investor caution ahead of Friday's key report on jobs, with unemployment still a big weak spot for the U.S. economy.
"We continue to see a fair amount of weakness in financials, and that is in part related to the unemployment," said Thomas Villalta, portfolio manager for Jones Villalta Asset Management in Austin, Texas. "Financials benefit from a stronger consumer."
The S&P financial sector was down 0.5 percent.
Still, Villalta said, the market's losses this week could be an indication that a disappointing payrolls number is already priced in, and Friday could bring a bounce in stocks.
The Dow Jones industrial average dropped 43.52 points, or 0.34 percent, at 12,680.06. The Standard & Poor's 500 Index was down 2.09 points, or 0.16 percent, at 1,345.23. The Nasdaq Composite Index was up 7.96 points, or 0.28 percent, at 2,836.19.
Electronic Arts Inc advanced 7.8 percent to $21.48, hitting its highest level since August 2009 and boosting the Nasdaq a day after a strong profit report.
In another commodities market, silver touched a five-week low and was set for its deepest weekly decline in nearly 30 years.