U.S. Treasuries prices fell sharply on Friday after the government reported that the U.S. private sector added 67,000 jobs, a surprisingly large number, to payrolls in August.

The Labor Department also said that overall U.S. employment fell for a third straight month, but the drop was far less than the market expected.

Overall non-farm payrolls fell by 54,000 but this was largely due to temporary federal census jobs decreasing by 114,000, and so private employment was seen as a better measure of labor market health.

The news seemed to weaken investors' need for safe-haven U.S. government debt, causing the benchmark 10-year Treasury note to fall more than a point in price, its yield rising to 2.76 percent from 2.625 percent late Thursday.

We've seen some pretty hefty asset allocation trades out of bonds and into stocks, said Kim Rupert, managing director of global fixed income analysis at Action Economics LLC in San Francisco.

Stock index futures soared on the labor market news, pointing to a sharply higher open on Wall Street.

If stocks get a sense that maybe the situation isn't as dire as presumed, they might see a little bit more upside into the long weekend, Rupert said. That may weigh on Treasuries.

The 30-year bond suffered a loss of more than two points, its yield jumping to 3.86 percent from 3.72 percent on Thursday.

The Treasury market also faces supply next week with the Treasury auctioning three-, 10- and 30-year securities.

The supply provided an extra incentive to cheapen up the Treasury market a little, she said, adding that before a long holiday weekend, huge market moves might not be sustained.

(Editing by Chizu Nomiyama)