(Updated in early morning New York time)

By Karen Brettell

NEW YORK, Feb 7 (Reuters) - U.S. Treasury yields rose on

Friday after data showed that employers added fewer jobs than

expected in January, while wage inflation beat economists'

expectations.

U.S. job growth was likely restrained by wildfires in

California and cold weather across much of the country, but a

4.0% unemployment rate probably gives the Federal Reserve cover

to hold off cutting interest rates at least until June.

Employers added 143,000 jobs last month, below economists'

expectations for 170,000 job gains.

"The top line didn't meet expectations," but other aspects

of the report including jobs revisions and the drop in the

unemployment rate were strong, said Michael Lorizio, head of

U.S. rates trading at Manulife Investment Management.

"This is something that would just further confirm that

the Fed has to be on hold and is still waiting to see how the

data will evolve," he said.

Average hourly earnings rose 0.5% in January for a 4.1%

increase on an annual basis, above expectations for a 3.8%

increase.

Consumer and producer price inflation for January due next

week will offer the next clues on whether price pressures are

continuing to ease closer to the Fed's 2% annual target.

Money market traders are less than certain that the Fed will

make two 25 basis point cuts this year, with 40 basis points of

rate reductions priced in by December.

The yield on benchmark U.S. 10-year notes was

last up 5.1 basis points on the day at 4.489%. The 2-year note

yield, which typically moves in step with interest

rate expectations for the Federal Reserve, rose 5 basis points

to 4.258%.

The yield curve between two-year and 10-year notes

was little changed on the day at 23.4 basis

points.

The Treasury Department will sell $125 billion in

coupon-bearing debt next week as part of its quarterly

refunding. This will include $58 billion in three-year notes on

Tuesday, $42 billion in 10-year notes on Wednesday and $25

billion in 30-year bonds on Thursday.

The Treasury on Wednesday said it expects to keep most

of its debt issuance plans

unchanged for the next few quarters

, despite some market speculation that new Treasury

Secretary Scott Bessent would moot the possibility of more

long-term debt issuance to fund deficits.