TREASURIES-U.S. bonds rally on disappointing jobs, wage growth

* U.S. yields slip from one-month high after jobs data

* U.S. Treasuries set for best day since "flash" rally

* Futures imply traders see Fed rate hike in late 2015

* Corporate bond supply, refunding put lid on rally (Updates market action, adds quote, recasts lead)

By Richard Leong

NEW YORK, Nov 7 (Reuters) - The U.S. Treasury debt market rallied on Friday as growth in U.S. jobs and wages in October fell short of expectations, reviving bets the Federal Reserve will not consider raising interest rates until late 2015.

Treasuries were on track for their best day since Oct. 15, when massive purchases of Treasuries by traders exiting short positions sent benchmark yields below 2 percent to 16-month lows.

Treasuries yields had hit one-month peaks shortly before the release of the government's jobs report early Friday, before falling back.

Market chatter that surfaced on Thursday that payroll gains might hit the 300,000 mark were dashed after the Labor Department reported a 214,000 job increase last month, below the 231,000 increase forecast by economists polled by Reuters.

The most glaring weakness in the report was the slim 0.1 percent uptick in average hourly earnings, falling short of a projected 0.2 percent gain. Fed officials have been worried that stagnant salary growth is holding back the economy.

"The market is reacting to the lack of wage inflation, given the heightened expectations from other recent data," said Jeffrey Rosenberg, chief investment strategist for fixed income at New York-based BlackRock (NYSE: BLK - news) .

The soft spots in the latest jobs report, underpinned by policy measures being undertaken by the Bank of Japan and expectations of further policy easing from the European Central Bank to help their struggling economies, stoked demand for Treasuries, analysts said.

"The main factor is ascribing to global dynamics, especially with the ECB and BOJ being especially aggressive," said Chris Molumphy, chief investment officer at the Franklin Templeton Fixed Income Group in San Mateo, California.

While October's jobs and wage growth were below forecast, there were some encouraging aspects to the labor report.

The jobless rate, seen as a broad gauge of labor slack, unexpectedly fell to a six-year low of 5.8 percent from 5.9 percent in September. Payroll growth in August and September was upgraded.

The yield on two-year Treasury notes, which is sensitive to investors' views on changes in Fed policy, was last at 0.503 percent, down 4 basis points from Thursday. It retreated from a one-month peak of 0.567 percent shortly before the jobs data.

The benchmark 10-year Treasury note yield was at 2.307 percent, down 7 basis points from Thursday's close. It rose to 2.407 percent, a one-month high, before the jobs data.

The fall in U.S. yields was mitigated by this week's heavy investment-grade corporate bond supply, which IFR, a unit of Thomson Reuters estimated at $42 billion, as well as the $66 billion in coupon-bearing Treasuries next week.

Short-term interest rates implied traders were not fully pricing in Fed rate increase until December 2015.

Earlier Friday, New York Fed President William Dudley said the U.S. central bank will likely raise interest rates "sometime next year."

On Wall Street, the three major stock indexes edged lower on the day, with the Standard & Poor's 500 last down 0.2 percent. (Reporting by Richard Leong; Editing by James Dalgleish, W Simon and Leslie Adler)