(Updated in late New York morning time)

By Karen Brettell

June 6 (Reuters) - U.S. Treasury yields rose after data

on Friday showed that employers added more jobs than economists

had expected in May, indicating that the labor market remains

solid despite concerns that it will weaken.

Employers added 139,000 jobs last month, above estimates for

a 130,000 increase. Average hourly earnings increased 0.4% in

May, above expectations for a 0.3% increase. The unemployment

rate held steady at 4.2%, as expected.

"The sell-off (in Treasuries) really reflects this idea that

growth sentiment is heading in a bullish direction. We have yet

another month of hard data resilience," said Will Compernolle,

macro strategist at FHN Financial.

"There is positive progress on tariffs moderating, even if

there's nothing final yet. And a lot of the doomsday scenarios

people thought were always one month away, it just seems to be a

less likelihood that it's coming," Compernolle said.

Investors are concerned that the labor market will soften as

companies grapple with the impact of tariffs, which many

analysts expect will slow the economy and add to inflation

pressures.

"The market was concerned a little bit about that

payroll number being weaker this morning... we had some softer

data this week," said Thomas Urano, co-chief investment officer

at Sage Advisory in Austin.

Data on Thursday showed that the number of Americans

filing new applications for unemployment benefits increased to a

seven-month high

last week.

Wednesday's jobs estimate from the ADP National

Employment Report was also weak, showing only

37,000 job gains

in May.

Friday's jobs report showed downward revisions for the

past two months, which took some gloss off of the data.

However, "overall, that just leaves us in a position

here where the labor market is still doing okay. I don't think

there are signs that it's falling off a cliff," said Urano.

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

last up 7.3 basis points on the day at 4.468% and earlier

reached 4.482%, the highest since May 20. Interest rate

sensitive two-year note yields rose 8.8 basis points

to 4.012%, also the highest since May 29.

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

was at 45 basis points.

The Federal Reserve is expected to keep rates steady when it

meets on June 17-18 as policymakers evaluate how tariffs will

impact the economy.

Fed funds futures traders are now pricing in a 62%

probability that the Fed will cut rates in, or before September,

compared to 74% on Thursday, according to the CME Group's

FedWatch Tool.

U.S. President Donald Trump, who has been critical of the

Fed keeping interest rates on hold, on Friday said the U.S.

central bank should cut rates by a full percentage point.

Traders are also focused on trade talks between the United

States and China.

Trump and Chinese leader Xi Jinping held a rare

leader-to-leader call on Thursday that left key issues to

further talks.

The planned meeting between U.S. and Chinese officials on

trade is expected to take place within seven days, White House

trade adviser Peter Navarro said on Friday.

Negotiations over a tax and spending bill that some

Republicans and billionaire Elon Musk have criticized for not

cutting enough spending are also being watched.

Longer-dated yields rose last month on concerns about

the deteriorating U.S. fiscal outlook.