Traders pare bets on Fed rate cuts after jobs report

July 3 (Reuters) - A still-strong job market will keep the Federal Reserve from cutting interest rates until September, and from delivering more than two quarter-point rate cuts all year, traders bet on Thursday

Futures contracts tied to the U.S. central bank's policy rate indicated just a 5% chance of a Fed rate cut in July, down from 25% before a Labor Department report showed U.S. nonfarm payrolls increased by 147,000 in June and the unemployment rate unexpectedly fell, to 4.1%.

Traders now see just two rate cuts by December; earlier they had expected three rate cuts by yearend.