TREASURIES-Prices rally, yields fall on weaker job growth

* U.S. job growth slowest in nine months

* Fed accommodation expected to continue

NEW YORK, April 5 (Reuters) - U.S. Treasuries rallied on Friday, letting yields fall to their lowest levels of the year, after the government's report that U.S. employment grew at its slowest pace in nine months raised concern that U.S. growth could slow in coming months. The government said the U.S. economy produced just 88,000 new jobs last month. The unemployment rate edged lower, but that was mainly due to people leaving the workforce. The jobs news when combined with weaker global equity markets, the Bank of Japan's recently announced monetary stimulus program, and escalating tension in the Korean peninsula encouraged investors to buy bonds, pushing yields lower. "Yields are returning to the lower levels where they should be," said Robert Tipp, chief investment strategist at Prudential Fixed Income in Newark, New Jersey. The benchmark 10-year Treasury note was 17/32 higher after the report, allowing its yield to ease to 1.71 percent. The price of the 30-year Treasury bond extended an early gain to two points, pushing its yield down to 2.87 percent from 2.99 percent late on Thursday. "A ton of traders must have fallen out of their seats this morning after seeing this weak jobs report," said Thomas DiGaloma, managing director at Navigate Advisors LLC in Stamford, Connecticut. The pullback in job growth supported the view that the Federal Reserve would keep buying bonds to try to keep the economy on the growth track. "The Fed will not reduce QE until after (Fed Chairman Ben) Bernanke leaves the Fed," DiGaloma said, referring to the Fed's unconventional monetary easing program known as quantitative easing, "and it will probably continue well after a new Fed chairperson takes the helm." The weak jobs report gives the Fed the "greenlight" to stick with monetary accommodation, agreed Wells Fargo Advisors chief fixed income strategist Brian Rehling in St. Louis, Missouri. That policy "will be positive for equities in the long term and keep interest rates low longer," he said.