TREASURIES-Yields fall as investors position for Friday's jobs data

(Corrects yield in paragraph 6 to 1.86 percent from 1.886 percent)

* Jobless claims increase

* Friday's jobs data in focus

* Trades close trades betting on further rate hikes

By Karen Brettell

NEW YORK, Feb 4 (Reuters) - U.S (Other OTC: UBGXF - news) . Treasuries' yields ended lower on Thursday as data showed weaker U.S. growth and investors closed trades that had bet on further interest rate increases ahead of Friday's closely watched employment report.

The number of Americans filing for unemployment benefits rose more than expected last week, suggesting some loss of momentum in the labor market amid a sharp economic slowdown and stock market selloff.

Worsening economic data in the past week has increased concerns about a U.S. slowdown and reduced expectations that the Federal Reserve will raise interest rates this year.

"The market expects U.S. data to slow down and the Fed not to hike even as much as it had earlier indicated," said Amrut Nashikkar, analyst at Barclays (LSE: BARC.L - news) in New York.

Friday's employment report is expected to show that employers added 190,000 jobs in January, according to the median estimate of 108 economists polled by Reuters.

Benchmark 10-year notes gained 6/32 in price to yield 1.86 percent, down from 1.88 percent late on Wednesday. The yields have tumbled from 2.30 percent this year.

Some investors have been closing trades that previously bet on further interest rate increases, which has added to market volatility.

"We're seeing unwinds of some fairly large curve trades and we're getting some fairly large moves in the market," said Dan Mulholland, head of Treasuries trading at Credit Agricole (Swiss: ACA.SW - news) in New (KOSDAQ: 160550.KQ - news) York.

These include bets that the curve between five-year notes and 30-year bonds would flatten, and that yields on five-year notes would increase, Mulholland said.

Intermediate-dated debt including five-year notes are the most sensitive to interest rate increases.

The five-year, 30-year yield curve steepened to a three-month high of 145 basis points on Thursday, and is up from a nine-month low of 122 basis points on Dec. 28.

Falling stock and oil prices this year have boosted demand for safe haven U.S. bonds as concerns grow about low inflation and the global economic slowdown.

The Bank of Japan's surprise move last Friday to introduce negative interest rates to stimulate the country's economy have also increased demand for U.S. bonds.

"There's a number of risk factors globally, including the situation in China, and a surprise rate cut in Japan ... that's basically what's driven yields to these levels," said Nashikkar. (Editing by Meredith Mazzilli and Cynthia Osterman)