TREASURIES-Yields rise as employers add more jobs than expected in April

(Updated in early New York morning time)

By Karen Brettell

May 2 (Reuters) -

U.S. Treasury yields rose on Friday after data showed that employers added more jobs than economists had expected in April, leading traders to pare back bets that the Federal Reserve will cut rates in June.

Nonfarm payrolls increased by 177,000 jobs last month after rising by a downwardly revised 185,000 in March. Economists polled by Reuters had forecast an increase of 130,000 jobs. The unemployment rate was unchanged at 4.2%.

"It's a little bit of a sigh of relief from the market's perspective that although there's some uncertainty around what the economic outlook is, at least for now the jobs data is holding up," said Jim Barnes, director of fixed income at Bryn Mawr Trust.

"It takes a little of the urgency off the table for the Fed to have to move," Barnes said.

Investors are concerned that new tariffs enacted by U.S. President Donald Trump's administration will slow growth and lead to a renewed bout of inflation.

Fed officials including Chair Jerome Powell have also expressed concerns about renewed price pressures and a still resilient labor market will give them more room to hold rates higher for longer.

Traders are now pricing in a 40% probability of a June cut, down from around 58% from before the jobs report, according to the CME Group's FedWatch Tool.

Friday's data also comes after a better than expected, though still weak

manufacturing report

for April on Thursday that sent yields higher.

Longer-dated debt is also under pressure ahead of auctions of the bonds next week. The Treasury will sell $58 billion in three-year notes on Monday, $42 billion in 10-year notes on Tuesday and $25 billion in 30-year bonds on Thursday.

Benchmark 10-year Treasury yields were last at 4.299%, up from around 4.231% on Thursday. Interest rate sensitive two-year yields were at 3.777%, up from 3.701%.

The yield curve between two- and 10-year notes was little changed on the day at 52 basis points. (Reporting By Karen Brettell; Editing by Emelia Sithole-Matarise and Nick Zieminski)