NEW YORK, Oct 7 (Reuters) - The yield on the benchmark U.S. 10-year Treasury note rose on Friday, after a solid report on the labor market largely extinguished any remaining hopes the Federal Reserve would alter its path of aggressive interest rate hikes as it seeks to combat inflation.

Nonfarm payrolls increased by 263,000 jobs last month, the Labor Department said in its closely watched employment report on Friday, above the 250,000 estimate of economists polled by Reuters. The unemployment rate fell to 3.5% from the 3.7% in the prior month.

Expectations the Fed will raise interest rates by 75 basis points (bps) increased following the data as fed funds futures implied as much as a 92% chance the policy rate will be increased to a 3.75% to 4% range at its November meeting, up from the 85% before the data release.

"Probably there were some people out there hoping for a weaker number that could set the stage for a Fed pivot. I'm sure they were disappointed," said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute in Charlotte, North Carolina.

"We've been through the 'Fed's going to pivot and pause' thing enough times now that hopefully there's not too many people betting on that given the Fed's comment. You could argue that hope springs eternal but it was dashed once again."

The yield on 10-year Treasury notes was up 6.4 basis points to 3.888%. The yield was on track for its tenth straight weekly rise, its longest such streak since 1994.

Treasury yields have been sensitive this week to any signs the labor market might be slowing in hopes it would give the U.S. Federal Reserve room to pivot to a less hawkish policy stance and slow its rate of interest rate hikes after three straight increases of 75 basis points.

The yield on the 30-year Treasury bond was

up 5.1 basis points

to

3.844

%.

But Fed officials have been consistent in recent comments that the central bank will take aggressive measures in hiking interest rates to combat rising inflation, raising concerns among investors it could tilt the economy into a recession.

New York Federal Reserve President John Williams said on Friday the Fed has more work to do to lower inflation and rebalance economic activity in a more sustainable way, while Minneapolis Federal Reserve Bank President Neel Kashkari said "inflation is much too high."

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as a reliable indicator of a recession when inverted, was at a negative 42.5 basis points, up from the negative 57.85 hit on September 22.

The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 6 basis points at 4.310%.

The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) was last at 2.423%, after closing at 2.352% on Thursday.

The 10-year TIPS breakeven rate was last at 2.273%, indicating the market sees inflation averaging 2.3% a year for the next decade.

(Reporting by Chuck Mikolajczak, additional reporting by Sinéad Carew; Editing by Nick Zieminski)