Wall Street was set to open little changed on Friday, as stock index futures pared earlier losses, after data showed the unemployment rate declined in January, even as payrolls fell.

U.S. employers unexpectedly cut 20,000 in January, but the unemployment rate dropped to a five-month low of 9.7 percent, according to a government report that hinted at labor market improvement.

We did see the average work week hours go up, so that's moving slowly in the right direction, said Dan Cook, senior market analyst at IG Markets in Chicago.

It means we're utilizing those employees we already have on the books, which tells me employers further down the line might be ready to hire again.

S&P 500 futures fell 2.7 points and were slightly below 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 added 17 points, and Nasdaq 100 futures rose 3 points.

Aetna Inc shares fell 2.9 percent to $28.39 in premarket trading after the health insurer posted lower quarterly profit early Friday, missing expectations, and forecast 2010 profit below Wall Street's target.

Lingering worries over the fiscal health of some European countries had weighed on futures, which pointed to a decline of as much as 1 percent at the open.

The cost of insuring Greek, Portuguese and Spanish government debt rose to record highs.

U.S. stocks suffered their worst losses in more than nine months on Thursday on fears over euro zone debt and an unexpected rise in U.S. claims for jobless insurance.

(Additional reporting by Leah Schnurr; editing by Jeffrey Benkoe)

Unemployment