* U.S. adds fewer jobs than expected in March
* Trade tensions between China and U.S. increase
* Fed Chair Powell to speak on Friday
NEW YORK, April 6 (Reuters) - U.S. Treasury prices gained on Friday after employers added fewer jobs than expected in March and as trade tensions mounted between the United States and China.
The U.S. economy created the fewest jobs in six months in March as the boost from mild temperatures faded, but a pickup in wage gains pointed to a tightening labor market,
It was a bit of a mixed read. Average hourly earnings were up in line with consensus, thats probably positive, said Aaron Kohli, an interest rate strategist at BMO Capital Markets in New York.
The disappointing parts of the report, aside from the headline, which could have been a bit of a payback from last months outperformance, was really the drop in the participation rate and the lack of a drop in the unemployment rate, Kohli added.
Trade tensions also boosted demand for low risk U.S. government debt as stocks declined.
China warned on Friday it would fight back "at any cost" with fresh trade measures if the United States continues on its path of protectionism, hours after President Donald Trump threatened to slap an additional $100 billion in tariffs on Chinese goods.
Tariffs could increase inflation on goods shortages, making it more likely the Federal Reserve will continue raising interest rates, though they also risk hurting economic growth.
The issues with it are essentially that it forces the Fed into a posture where they have to be more aggressive just to fight inflation and at the same time it depresses long term global economic output, Kohli said.
Benchmark 10-year notes gained 7/32 in price to yield 2.806 percent, down from 2.832 percent on Thursday.
Fed Chairman Jerome Powell is due to speak about the economic outlook at an event in Chicago on Friday. (Editing by Bernadette Baum) )