July 7, 2017 / 2:45 PM / 18 days ago

MONEY MARKETS-Traders keep bets on Dec U.S. rate hike after June jobs data

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(Updates market action, adds quote)

July 7 (Reuters) - U.S. interest rate futures held steady on Friday as data showing an unexpectedly large gain in jobs but only a gradual wage increase for June left traders sticking with their bets of a possible U.S. rate hike in December.

Employers hired 222,000 workers in June, the U.S. Labor Department said earlier on Friday. That exceeded the 179,000 forecast among economists in a Reuters poll.

Average hourly earnings grew 0.2 percent, below expectations of 0.3 percent.

The jobless rate edged up to 4.4 percent in June from a 16-year low of 4.3 percent in May as more people looked for work.

"We continue to expect the Fed to announce the tapering of the balance sheet in September and raise rates in December, but their message will likely show less concern about overheating in the economy as this report showed the opposite," Bank of America Merrill Lynch economists wrote in a research note.

At 10:15 a.m. (1415 GMT), federal funds futures implied traders saw a 55 percent chance that the Federal Reserve would raise key overnight borrowing costs by at least a quarter point at its Dec. 12-13 meeting, down slightly from Thursday's close, according to CME Group's FedWatch program. (Reporting by Richard Leong and Ann Saphir; Editing by Lisa Von Ahn)

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