(Updates after U.S. jobs data)

Jan 10 (Reuters) -

Euro zone government bond yields rose to new multi-month

highs on Friday after data showed the U.S. economy added far

more jobs than expected in December, casting further doubt on

the number of Federal Reserve rate cuts this year.

Germany's 10-year bond yield rose 7 basis points (bps)

to 2.597% after the data, its highest since July, having traded

around 3 bps higher beforehand.

The size of the U.S. economy and importance of the

dollar means American data and expectations about Fed rate cuts

heavily influence other markets.

The benchmark 10-year U.S. Treasury yield, which sets

the tone for borrowing costs around the world, rose 10 basis

points to 4.79%, the highest since November 2023. Yields rise as

prices fall and vice versa.

Data on Friday

showed the U.S. economy added 256,000 jobs in December, up

from 212,000 in November and well above expectations for a

160,000 increase. The unemployment rate fell to 4.1%, from 4.2%.

Traders now see

just one

reduction from the Fed this year, coming in June, according

to money market pricing. Before the report they had seen the Fed

cutting as early as May and saw about a 50% chance of a second

rate cut by year-end.

In Europe, markets slightly trimmed their bets on ECB

rate cuts this year by about 5 bps. The ECB is still expected to

cut by more than 90 bps in 2025, reflecting the bloc's much

weaker economy.

Germany's 2-year bond yield, which is

sensitive to ECB rate expectations, rose 6 bps to its highest

since November at 2.297%.

Bond yields around the world have risen this week as

markets have reconsidered the outlook for central banks, with UK

debt

particularly hard hit

as investors focus on the country's public finances.

"Good news for the strength of the economy and bad news

for those hoping for interest rate cuts, as inflation will stay

bang at the top of the Fed's agenda now," Neil Birrell, chief

investment officer at Premier Miton Investors, said of the data.

"The jump in bond yields looks set to continue."