Stocks were set to drop at the open on Friday, and a mixed report on the U.S. labor market could make trading volatile.

The uncertain outcome of Greece's sovereign debt crisis and its implications for Europe's economy will also keep trading choppy following two days of steep gains.

A government report showed the U.S. economy added fewer jobs than expected in October, but a fall in the jobless rate to a six-month low and upward changes to prior months' job gains pointed to underlying strength in the labor market.

It's not a game-changer but when you take into account the upward revision to prior months and the drop in the unemployment rate, it's a step in the right direction, said John Canally, economic strategist at LPL Financial in New York.

The focus on developments from Europe has kept stock trading volatile, with the S&P 500 swinging more than 1.5 percent every day this week. The index is on track to post its first negative week in five after closing on Monday its best month in 20 years.

As far as Greece is concerned, the news changes by the minute. It's difficult for the market to predict a move, said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

S&P 500 futures fell 7 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures dropped 52 points while Nasdaq 100 futures lost 12 points.

Futures and European shares slid after German Chancellor Angela Merkel said hardly any countries in the Group of 20 industrialized nations said they will participate in the euro zone bailout fund.

Equities earlier held to the previous day's gains after Greece called off a referendum that could have threatened its membership in the euro zone, easing concerns about a Greek default.

In a move to make its deficit targets credible, Italy agreed to have the International Monetary Fund monitor the country's progress with long delayed reforms of pensions, labor markets and privatization. Italy's debt burden could be the market's next target after a resolution of Greece's crisis.

Investors retained some appetite for equities as Groupon Inc raised $700 million in an initial public offering, making it the largest IPO by an Internet company since Google Inc in 2004.

(Reporting by Rodrigo Campos, additional reporting by Emily Flitter and Angela Moon; Editing by Padraic Cassidy)

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