(Updates to mid-afternoon trading) * Wall Street likes jobs report, considers knock-on effects * Stocks mixed, oil declines * Treasury yields gain BOSTON, Aug 6 (Reuters) - A positive jobs report drove Wall Street stocks rose modestly higher and spurred a rise in Treasury yields on Friday, but investor optimism was tempered by worries about inflation and the impact of the coronavirus Delta variant on the economy. Nonfarm payrolls increased by 943,000 in July after rising 938,000 in June, the Labor Department said in its closely watched employment report, pushing unemployment down to 5.4% and suggesting the economy maintained its strong momentum. Economists polled by Reuters had forecast payrolls increasing by 870,000 jobs. “It’s a number that’s hard to say anything but positive things about,” Sameer Samana, a market strategist at Wells Fargo Investment Institute in St. Louis, said. “Especially with the Delta variant kind of perking up, it would be much more confidence-building for the market to have a very strong economy.” Still, stock gains were muted. The Dow Jones Industrial Average rose 157.71 points, or 0.45%, to 35,221.96, the S&P 500 gained 8.66 points, or 0.20%, to 4,437.76, and the Nasdaq Composite dropped 63.06 points, or 0.42%, to 14,832.06. Peter Cardillo, an economist with Spartan Capital Securities in New York, said that while the jobs number is “solid,” it indicates “inflation has more staying power and is not necessarily temporary.” U.S. Treasury yields rose after the jobs report came in line with goals the Federal Reserve has set to start unwinding stimulus. Benchmark 10-year Treasury yields rose to 1.2902%, approaching a week high after their U.S. close at 1.217% on Thursday. Yields have been under 2.0% since July 2019. “The strength of hiring calls into question the rally in Treasuries that took place over the last few months,” Mike Bell, a market strategist at J.P. Morgan Asset Management, said in an email. “We expect this to be the start of a sustained move higher in Treasury yields over the rest of the year.” Investors will now focus on when and how quickly the Federal Reserve could reduce its support for the economy. Policymakers suggested this week that an interest rate increase could come in late 2022 or 2023. The Fed’s annual meeting of central bankers in Jackson Hole, Wyoming, later this month is seen as offering clues to the Fed’s thinking. Oil prices declined further on Friday, set for their biggest weekly loss since October after falls earlier in the week triggered by rising COVID-19 cases and a surprise build in U.S. crude stockpiles. U.S. crude fell 0.74% to $68.58 per barrel, and Brent was at $70.97, down 0.45% on the day. The dollar’s value relative to other currencies rose on Friday, as the jobs report bolstered the case for faster U.S. policy tightening. The dollar index was last up about 0.521, or 0.565%, in early afternoon trading. The stronger dollar and potential for higher yields hurt gold. Spot prices dropped 2.2% to $1,763.60 an ounce, and U.S. gold futures fell 2.48% to $1,760.00 an ounce. Bitcoin was up around 5.3% at $43,061, its highest price since May. Ether, the world’s second largest cryptocurrency, rose to around $2900, a 3.3% gain, a day after a major software upgrade to its underlying blockchain. Reporting by Lawrence Delevingne in Boston Additional reporting by Caroline Valetkevitch, Medha Singh and Stephen Culp Editing by Matthew Lewis and Leslie Adler Our Standards: The Thomson Reuters Trust Principles.