Stocks lost ground on Friday as financials were hit by a court ruling that voided two home foreclosures and as data showed disappointing jobs growth last month.

After trading flat earlier, stocks extended losses as the euro fell further and oil prices turned negative.

Wells Fargo & Co and US Bancorp lost a ruling by Massachusetts' top court, which said the banks failed to show they held the mortgages at the time they foreclosed. The decision could affect foreclosures nationwide.

It's going to delay things at best and just increases the uncertainty as far as the type of exposure they might have, said Alan Lancz, president of Alan B. Lancz & Associates Inc in Toledo, Ohio.

Wells Fargo shares gave up 3.1 percent at $31.16 and US Bancorp shed 1 percent to $26.03. The KBW Bank index <.BKX> lost 1.6 percent.

The Dow Jones industrial average <.DJI> slipped 55.97 points, or 0.48 percent, to 11,641.34. The Standard & Poor's 500 Index <.SPX> fell 7.12 points, or 0.56 percent, to 1,266.73. The Nasdaq Composite Index <.IXIC> lost 20.03 points, or 0.74 percent, to 2,689.86.

Investors initially treaded lightly after the mixed employment report that showed non-farm payrolls rose 103,000, below analysts' expectations.

The report also showed a surprisingly large number of people gave up searching for work, tempering the positive news of a big drop in the unemployment rate.

The euro fell to a near four-month low against the dollar. Stocks and the euro showed a significant correlation last year, with the currency viewed as a proxy for euro zone debt concerns.

On Capitol Hill, Federal Reserve Chairman Ben Bernanke sounded cautiously more upbeat than in the recent past, citing improvements in consumer spending and a drop in claims for jobless benefits as hopeful signs for the recovery.

(Reporting by Leah Schnurr; Editing by Kenneth Barry)