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TREASURIES-Long-dated yields up after U.S. jobs data; bets rise on Dec rate hike

* Yields up as investors see December as more likely for Fed

hike

* 30-year yields touch one-week high

* U.S (Other OTC: UBGXF - news) . August jobs report disappoints with 151,000 jobs

added

* Two-, 10-year yields fall to lows after jobs data then

rebound

(Updates to afternoon trading)

By Dion Rabouin

NEW YORK, Sept 2 (Reuters) - U.S. Treasury yields on

longer-dated maturities rose on Friday, with shorter-dated

yields flat, after a weaker-than-expected U.S. non-farm payrolls

report that suggested the Federal Reserve was unlikely to raise

U.S. short-term interest rates this month.

Friday's Labor Department report showed U.S. employers added

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151,000 jobs in August, missing the 180,000 mark expected by

economists polled by Reuters.

That took a Fed rate hike in September off the table, but

kept the door open for an increase this year at the U.S. central

bank's meeting in November or December, analysts said.

"We're in a low-expectation environment and these numbers

are still positive," said Ellis Phifer, market strategist at

Raymond James in Memphis, Tennessee.

The Treasury market initially rallied after the data's

release, with benchmark 10-year Treasury yields falling to their

lowest level in a week and two-year yields hitting a 10-day low.

But traders reversed course after perusing the data, which

showed the Department upwardly revised July's numbers to a

275,000 increase and that the U.S. economy added an average of

232,000 jobs over the past three months.

Two-year notes were last little changed in price

to yield 0.797 percent. The two-year yield fell to 0.746 percent

after the data, the lowest since Aug. 23.

Ten-year Treasury notes fell 10/32 in price to

yield 1.604 percent. After the data, yields on the 10-year note

fell to 1.543 percent, the lowest since Aug. 26.

The 30-year Treasury bond rose to a one-week

high of 2.29 percent during the day. It was last down 1-2/32 in

price to yield 2.278 percent.

Not everyone is convinced that a September rate hike has

been ruled out by the Fed. Economists at Barclays (LSE: BARC.L - news) , Goldman Sachs (NYSE: GS-PB - news)

and BNP Paribas (LSE: 0HB5.L - news) all held or increased their probability of a

September move in notes released Friday.

The overall market remains unconvinced, however, with Fed

funds futures prices showing investors see just a 21-percent

chance of a rate hike at this month's meeting. But odds for a

December hike rose to 55 percent, from 53 percent on Thursday,

according to CME Group (Kuala Lumpur: 7018.KL - news) 's FedWatch tool.

"Barclays and some other firms are still holding on to

September, but I'm in the camp that if they don't go in

September - and I don't think they will - that it increases the

odds that they'll go in December," said Jack McIntyre, CFA and

portfolio manager at Brandywine Global Investment Management in

Philadelphia.

(Reporting by Dion Rabouin; Editing by Dan Grebler and Chizu

Nomiyama)