TREASURIES-Take breather in Asia before housing data

TOKYO, Oct 2 (Reuters) - U.S. Treasuries were mostly steady in Asian trading on Tuesday as investors awaited the release of pending home sales data for clues on the outlook for the slumping housing sector. Long-dated bonds dipped slightly after rising sharply on Monday when data showed that U.S. manufacturing expanded in September at its slowest pace since March.

A focal point later this session will be the data on pending home sales for August, said Yasutoshi Nagai, chief economist for Daiwa Securities SMBC's economic research group.

Since investors have grown used to seeing weak housing numbers, Treasuries might struggle if pending home sales were to show a rebound after dropping sharply in July, Nagai said.

"If there is a rebound, investors may start to think that data on housing is mixed rather than being weak across the board," Nagai said.

The August pending home sales index is expected to show a decline of 2.1 percent, according to a Reuters survey of economists, compared with a 12.2 percent drop in July.

December 10-year note futures rose 0.5/32 to 109-11.5/32 TYv1 as of 0245 GMT.

Ten-year notes slipped 2.5/32 in price, pushing yields up to 4.559 percent US10YT=RR. The 30-year long bond slipped 2.5/32 in price to yield 4.790 percent US30YT=RR after surging over 25/32 in price on Monday.

The rally in long-dated bonds on Monday might have been caused by profit-taking by investors who had been betting on a steepening of the yield curve, Nagai said.

The Institute for Supply Management said on Monday that its index of national factory activity for September fell for a third straight month to 52.0 from 52.9 in August, below economists' median forecast for a dip to 52.6.

But the index remained above the critical threshold of 50, signaling ongoing expansion in manufacturing, and the employment component showed a slight improvement.