* Ten-year yields retrace after earlier hitting 2.93 percent * Some traders see short squeeze after initial yield spike * Strong jobs data raises bets that Fed will act sooner * Fed to buy $4.25 billion to $5.25 billion notes due 2017, 2018 By Karen Brettell NEW YORK, Dec 6 (Reuters) - U.S. Treasuries yields were little changed on Friday after a strong jobs report had sent them surging to their highest since September, as investors evaluated when the Federal Reserve is likely to begin paring its bond-purchase program. U.S. employers added 203,000 jobs in November and the jobless rate fell to a five-year low of 7.0 percent, raising expectations the Federal Reserve will begin paring its bond-purchase program in coming months. But Treasuries were volatile and some traders said some investors positioning for yield increases may have been caught by a short squeeze that sent yields tumbling back down to be unchanged, after an initial surge. "The market reacted pretty violently to the report and I think a lot of people got caught in the hole," said Charles Comiskey, head of Treasuries trading at Bank of Nova Scotia in New York. Benchmark 10-year notes were last up 1/32 in price to yield 2.87 percent, after rising as high as 2.93 percent, the highest since Sept. 13. The strength of the data may nonetheless increase bets that the Fed could begin paring its $85 billion-a-month program at its January meeting, and some traders say the U.S. central bank could act as soon as this month. "It pulls forward some expectations, potentially for a December taper," said Ira Jersey, an interest rate strategist at Credit Suisse in New York, though he added that Credit Suisse sees a move in January as more likely. Jersey said 10-year yields price in the reduction of purchases at around 2.95 percent, making further large selloffs less likely. The Fed will meet on Dec. 17 and 18 in its final meeting of the year. Some traders say it may be more hesitant to act in December for fear of disrupting market liquidity heading into year-end. Many traders had expected that the Fed would be most likely to act at its March meeting, before the recent run of stronger data brought forward expectations. The Fed will buy between $4.25 billion and $5.25 billion in notes due 2017 and 2018 on Friday as part of its ongoing purchase program. The Fed is seen as likely to stress its plans to hold rates near record lows even as it begins to pare bond purchases, in an effort to stem any dramatic yield rise that could otherwise threaten the economic recovery. Interest rate futures prices fell on Friday, but they do not yet reflect a shift in market expectations away from the summer of 2015 as the earliest time frame for the Federal Reserve to begin a rate-hike regime. Prices on the July 2015 Fed Funds futures contract were down 2 basis points at 99.69 in morning trading on the Chicago Mercantile Exchange. That lifted the market-implied probability for a Fed rate hike at its two-day meeting ending July 29, 2015, to around 60 percent from 55 percent on Thursday, according to the CME's FedWatch website. Chances of a hike at the June 16-17, 2015, meeting increased to 44 percent from around 39 percent the day before, FedWatch showed.