In This Article:
* Australian shares add 0.8 pct, Japan's Nikkei up 0.4 pct
* Investors cheer U.S. March manufacturing activity improvement
* U.S. retail sales post unexpected drop in Feb.
* Sterling takes knock on Brexit uncertainty
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Daniel Leussink
TOKYO, April 2 (Reuters) - Asia shares extended their rally on Tuesday as factory activity surveys from China and the United States boosted investor confidence, triggering the largest one-day sell-off in the U.S. Treasury market in nearly three months.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent to a seven-month high after rallying more than one percent in the previous session.
Australian shares gained 0.8 percent while Japan's Nikkei advanced 0.4 percent, extending its gains for a third session.
Wall Street shares jumped on Monday, with the S&P 500 and Dow Jones Industrial Average both rising more than one percent, with the Dow lifted by sharp gains in Caterpillar Inc and Boeing Co.
Investors cheered U.S. data overnight showing improvements in manufacturing activity last month and construction spending for February, which overshadowed an unexpected drop in retail sales.
The upbeat readings added to earlier data showing China's manufacturing sector surprisingly returned to growth for the first time in four months in March in a sign government stimulus steps were starting to be felt.
The rare bright news for the global economy comes in the wake of persistent worries over cooling demand across the world, with the Sino-U.S. tariff dispute, slowing trade and corporate profits prompting investors to dump risk assets over the past several months.
"The market is reacting to the improvement of the sentiment in China. Many investors are buying in anticipation of a rise in shares," said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
"But thinking about how things really are, at the end of the week (U.S.) jobless claims will be released and it's true that individual consumption, which accounts for 70 percent of gross domestic product, hasn't been good. I think that has to be taken into account," Fujito said.
The encouraging data on manufacturing activity in the world's two biggest economies led to a wobbly start to the U.S. bond market, with the U.S. benchmark 10-year Treasury note yields booking their largest single-day jump since Jan. 4.
The U.S. 10-year Treasury yield overnight jumped to a more than one-week high of 2.502 percent, moving off a 15-month low of 2.340 percent touched on March 25.