By Min Zeng Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--A round of decent economic data from the world's two largest economies sparked broad-based selling in safe-haven Treasurys Tuesday, tripping up the bond market's two-month bull run. The benchmark 10-year yield, which moves inversely to its price, moved to its highest mark since June 1. The prospect of back-to-back sessions of lower Treasury prices--they dropped Monday also--prompted some bond bears to believe the overbought market is due for a correction. However, other traders quickly cautioned that the selling won't continue because of the generally dismal U.S. economic data and uncertainty about the euro-zone's sovereign debt problems. A strong industrial production report from China suggested the world's No. 2 economy is still growing robustly, despite tightening monetary policy to curb inflation. While the country's consumer prices continued to rise, the pace of month-to-month change decelerated: two signs of relief for investors, who hope that China's roaring economy can avoid a hard landing. In the U.S., overall retail sales fell by 0.2%, but the decline is less than the 0.6% drop-off forecast by economists. Excluding auto sales, sales rose by 0.3%. The producers price index, a measure of inflation at wholesale levels, rose by 0.2%, slightly higher than a consensus gain of 0.1%. "This was a disappointment for those looking for weaker data," said Charles Comiskey, head of Treasury trading at Bank of Nova Scotia in New York. "People who have long the market lightened it up." A long is a wager betting on a rise in bond prices. A short is the opposite bet. In recent trade, the benchmark 10-year note was 20/32 lower to yield 3.064%. The yield tumbled to a six-month low of 2.917% last week. Now traders are looking at 3.12% as the next major level for the yield-a break past that would push the yield to 3.25%, they say. But James Newman, head of U.S. government and agency trading in New York at Keefe, Bruyette & Woods Inc., said the selling in the Treasury market is unlikely to be sustained. He added "I don't think it will be rewarding to be short the Treasury market." The economic data generally have been "less stellar" and the 10-year yield is likely to gyrate around 3% mark in the short term, he said. -By Min Zeng, Dow Jones Newswires; 212-416-2229; min.zeng@dowjones.com

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