TOKYO, March 4 (Reuters) - U.S. Treasuries were firm in Asia on Monday, as automatic "sequestration" spending cuts officially took effect after political leaders failed to agree on steps to avoid them -- raising worries that fiscal drag could crimp U.S. economic growth.
* The yield on 10-year notes stood at 1.846 percent, little changed from late U.S. levels last week and near one-month low of 1.836 percent set last week.
* President Barack Obama and congressional Republican leaders failed last week to find an alternative budget plan to avert the $85 billion across-the-board ending cuts.
* Congress and Obama could still halt the cuts in the weeks to come, but neither side has expressed any confidence it will be able to do so.
* Bond yields have fallen into a new, slightly-lower range since a dramatic rally last Monday following Italy's inconclusive election, which has sparked worries political crisis could undermine Italy's efforts to fix its debt problems.
* "No one thinks Italy is going to default. But unless you have a government, the European Central Bank cannot would not be able to buy Italian debt. And you can't ignore the fact that Italian voters said 'no' to austerity," said a trader at a Japanese bank.
* Since the election Italian political parties have been wrangling over how to form a government as no major political bloc won full control of parliament, raising the spectre of another election.
* Treasuries were unfazed by data from the Institute for Supply Management on Friday showing production at U.S. factories grew last month at its fastest pace since June 2011.
* Taking the shine off the data, however, was a tepid growth in consumer spending in January as well as slump in disposable income after tax cuts began to expire earlier this year.