(Reuters) - Traders on Tuesday pared bets the Federal Reserve will deliver a first interest-rate cut in September after a government report showed wholesale prices rose more than expected in April. 

The 0.5% increase in last month's producer price index from a month earlier provided little comfort that progress on inflation had resumed after disappointingly strong first quarter inflation data.

After Tuesday's PPI report traders saw about a 60% chance of a rate cut in September, compared with a 64% chance seen before the report.