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* Rate-futures traders peg Jan. 2015 for first Fed rate hike
* Fed wants sustained jobs gains before cutting bond buys
* Fed seen keeping rates low 1-2 years after bond buys end
* Wall Street sees bond-buying through at least end of 2013
By Ann Saphir
SAN FRANCISCO, March 8 (Reuters) - The Federal Reserve will likely look beyond Friday's surprising pickup in U.S. jobs growth, seeking several months of strong employment data before trimming its bond purchase program, and probably waiting to raise interest rates for at least another year after that.
"The surprising improvement in the health of the labor market does not necessarily mean the Fed will start to look at an exit from its asset buying program any time soon," Markit chief market economist Chris Williamson said. "A sustained run of stronger job creation than even the nice surprise seen in February is needed to generate a significant further reduction in the unemployment level."
U.S. employers added 236,000 jobs, the U.S. Labor Department said on Friday, more than the 160,000 expected.
The jobless rate fell to 7.7 percent, its lowest since December 2008. The rate had been 7.9 percent.
After the jobs report, short-term interest-rate futures showed traders increasing bets the Fed will first hike rates in December 2014 and giving a better than even chance that rates would rise in January 2015.
The Fed under Chairman Ben Bernanke has kept short-term interest rates near zero for more than four years, and has vowed to keep them there until the unemployment rate falls to at least 6.5 percent, as long as inflation stays under control.
If employers continue to add jobs at the current pace, the U.S. unemployment rate could reach that level by April 2014, RBC Capital Markets' Tom Porcelli predicted.
"Both Bernanke and (Fed Vice Chair Janet) Yellen have been clear that 6.5 percent is not a trigger, but should we continue to see employment reports like these on a sustained basis, it will become more difficult for the (Fed) to maintain an excessively aggressive easing bias," he said.
The central bank has said it will keep buying assets until the outlook for the jobs market has improved substantially. The Fed is currently buying $85 billion a month in mortgage-backed securities and Treasuries in an effort to push down long-term borrowing costs and spur growth and hiring.
"This may not be the substantial improvement in the labor market outlook that the Fed is looking for, but things are moving in the right direction," said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.
Still, Fed officials have repeatedly said they will look at more than just the unemployment rate to judge whether asset purchases are no longer needed.
Wall Street expects the Fed to keep on buying bonds through the end of the year, a Reuters poll of top economists on Friday showed.
Chicago Fed President Charles Evans, a chief architect of the Fed's easy money policy, has called for six months of jobs growth above 200,000 per month, as well as above-trend GDP growth, before he would support an end to the bond-buying program known as quantitative easing, or QE.
"It's a little too soon to say this means the end of QE," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. Still, he said, it could add to expectations that the Fed may back down from bond-buying sooner than thought.
St. Louis Fed President James Bullard has suggested cutting the bond-purchasing program by $15 billion for every one-tenth of a percentage point improvement in the unemployment rate. But Bullard's approach has won few converts at the Fed, which is relying on a more qualitative assessment of the jobs market as it judges how long to keep buying bonds.
Many other Fed officials have said they see a need for bond-buying well into 2013.
The Fed's policy-setting panel next meets March 19-20.
In response to the jobs report, short-term interest-rate futures fell as traders boosted bets that the Fed will first hike rates in December 2014, putting the likelihood at as high as 49 percent, up from 42 percent before the report.
By mid-day, rate futures prices suggested a 45 percent chance of a December 2014 rate hike.
Traders gave a January 2015 rate hike a 54 percent probability, based on contracts traded at CME Group Inc's Chicago Board of Trade.
Ten-year Treasuries also fell sharply after the report, pushing the yield up to around 2.08 percent, its highest since April. Yields were just 1.88 percent at the beginning of the week.
But the data released Friday were not universally strong. They showed the average length of unemployment increased to 36.9 weeks and the number of discouraged workers grew.
That data could temper optimism that the jobs market has made a decisive turn.
Employment gains could be hurt by the across-the-board government spending cuts that went into effect earlier this month, and by other fiscal measures designed to rein in the growing national debt that Bernanke has warned could crimp growth in the short term.
"It's not anything that goes to change perspectives, and particularly the Fed's perspective," Ellen Zentner, senior U.S. economist at Nomura Securities in New York, said of the latest jobs data.