TREASURIES-US yields gain after strong economic data

(Updates to 1500 EDT)

By Karen Brettell

NEW YORK, Oct 30 (Reuters) -

The benchmark 10-year Treasury yield pared an earlier drop on Wednesday and shorter-dated yields rose on strong U.S. economic data ahead of Friday's highly anticipated October jobs report.

The ADP National Employment Report showed private payrolls increased by 233,000 jobs last month after rising by an upwardly revised 159,000 in September.

The U.S. economy maintained solid growth with a 2.8% annualized rate in gross domestic product in the third quarter, as ebbing inflation and strong wage gains powered consumer spending.

"The economic data this morning was generally good, as anchored by the first estimate of third-quarter GDP, which points towards healthy underlying growth and moderating inflation," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia.

Yields have jumped this month on stronger U.S. economic data, including a much better-than-expected jobs report for September, which has led to bets that the Federal Reserve will cut interest rates at only a modest pace.

Traders see a 25 basis point cut at the Fed's Nov. 6-7 meeting as near certain, but only 73% odds of a 25 basis point reduction at both its November and December meetings, the CME Group's FedWatch Tool showed.

Employers added an estimated 113,000 jobs in October, according to economists polled by Reuters, but analysts noted that the number could be lower due to recent hurricanes in areas including Florida and North Carolina.

The Personal Consumption Expenditures (PCE) Price Index for September is also due on Thursday.

The benchmark 10-year yield was last down 1 basis point at 4.264%, after reaching a nearly four-month peak of 4.339% on Tuesday.

The two-year yield rose 3.5 basis points to 4.154%. It hit a high of 4.179% on Tuesday, its strongest level since Aug. 1.

The yield curve between two-year and 10-year notes , flattened 4 basis points on the day to 11 bps.

Yields dropped earlier on Wednesday in line with British government debt yields as British finance minister Rachel Reeves announced her budget plans to parliament.

Gilt yields later

turned sharply higher

.

Investors have been hesitant to take large positions in Treasuries before the Nov. 5 U.S. elections.

Election gambling sites show greater odds of Republican former President Donald Trump winning the U.S. presidency, though political polls show a roughly even chance of a victory by Trump or Democratic Vice President Kamala Harris.

Trump's policies on enacting higher tariffs are seen as likely to stoke inflation.

"A world in which a Trump administration both institutes tariffs and puts pressure on the Federal Reserve to keep short-term rates lower increases long-term inflation risks. I think that's a good piece of why the curve would be steeper in that scenario," said LeBas.

The U.S. Treasury Department said on Wednesday it will keep sizes of its coupon-bearing auctions steady in the coming quarter, as was widely expected.

(Reporting by Karen Brettell; Editing by Jan Harvey and Richard Chang)