Traders see higher chances of Sept U.S. rate hike

NEW YORK (Reuters) - Traders anticipated on Friday an increased likelihood the U.S. Federal Reserve would raise interest rates in September following a mostly in-line domestic July payroll report.

In interest rates markets, futures on the federal funds rates which the U.S. central bank targets to achieve its policy objectives fell after the government said U.S. employers added 215,000 workers in July, less than the 223,000 increase forecast among analysts polled by Reuters.

The slightly smaller-than-expected rise last month was offset by upward revisions on hiring in May and June.

U.S. overnight indexed swap rates rose after the latest jobs data.

They suggested traders were pricing a 52 percent chance the Fed would raise rates in September, up from 47 percent prior to the data, according to John Briggs, head of cross-asset strategy at RBS Securities Inc in Stamford, Connecticut.

(Reporting by Richard Leong; Editing by Meredith Mazzilli)

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