TREASURIES-Fall in Asia as stocks gain on China data

TOKYO, Sept 1 (Reuters) - U.S. Treasuries fell in Asia on Wednesday as investors shifted funds to stocks from the safe-haven government bonds after data showing a moderate rebound in China's manufacturing sector.

* China's official purchasing manager's index rose to 51.7 in August from 51.2 in July after three months of slowing growth. It was the 18th straight month that the PMI has stood above the threshold of 50 that demarcates expansion from contraction. [ID:nTOE68001O]

* Tokyo's Nikkei stock average .N225 was up 0.9%, rebounding from a 16-month intraday low hit earlier in the day. The MSCI Asian stock index outside Japan .MIAPJ0000PUS rose 1.4 percent. [.T]

* Investor risk appetite in Asia received further help as data showed on Wednesday Australia's economy grew at its fastest pace in three years in the second quarter. [ID:nSGE67U0L3]

* Traders also booked profits after Treasuries rallied the pervious day, when minutes from the Aug. 10 Federal Reserve policy meeting showed top central bank officials saw increasing risks to U.S. economic growth. [ID:nN31253959]

* The underlying tone in the Treasury market remained bullish, however, as investors stayed concerned the U.S. recovery is losing momentum, traders said.

* "Many players bet Treasuries will extend their rally as recent data has shown slower activity in U.S. manufacturing and little improvement in the housing sector," said a senior trader at a Japanese brokerage. "Investors expect the 10-year Treasury note yield to fall as low as 2.0 percent sooner or later."

* The benchmark 10-year note slid 21/64 in price to yield 2.507 percent US10YT=RR, up 3 basis points from late U.S. trade on Tuesday. The 10-year yield hit a 19-month trough of 2.42 percent last week.

* Two-year note yields stood at 0.489 percent US2YT=RR, up 1 basis point on the day, while 30-year notes dropped 17/32 to yield 3.547 percent US30YT=RR, up 2 basis points.

* Investors will closely watch ADP's report on the private labour market at 1215 GMT ahead of Friday's high-profile monthly employment data from the Labor Department. The Institute for Supply Management will release its factory data at 1400 GMT. [ECI/US] (Reporting by Rika Otsuka; Editing by Joseph Radford)