* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Nikkei, Shanghai at 2-month tops as new tariffs avoided
* Treasury bonds off as market scales back bets on Fed easing
* PMI factory surveys disappoint, from China to Japan
* Oil prices jump as OPEC looks set to extend supply cuts
SYDNEY, July 1 (Reuters) - Stocks rallied and bonds retreated in Asia on Monday as the United States and China agreed to restart trade talks, leading investors to pare wagers on aggressive policy easing by the major central banks.
The dollar firmed on the safe-haven yen as Treasury yields rose and futures reined in bets for a half-point rate cut from the U.S. Federal Reserve this month.
"The Trump-Xi G20 meeting looks to be a modest win for China and a positive for risk assets short term, but well within the range of expected outcomes," said Westpac economist Richard Franulovich.
"Fed rate cut expectations are likely to see a sustained trimming, though more so for their meeting on July 31 than over the next year," he added. "A 50 basis point rate cut seems very unlikely."
The United States and China agreed on Saturday to resume trade negotiations after President Donald Trump offered concessions to his Chinese counterpart Xi Jinping when the two met at the sidelines of the G20 summit in Japan.
These included no new tariffs and an easing of restrictions on tech company Huawei in order to reduce tensions with Beijing. China agreed to make unspecified new purchases of U.S. farm products and return to the negotiating table.
The initial reaction was one of relief that at least new tariffs were avoided and Japan's Nikkei climbed 2.1% to a two-month top. MSCI's broadest index of Asia-Pacific shares outside Japan added 0.5%.
Chinese blue chips jumped 2.6% to their highest since late April. E-Mini futures for the S&P 500 rose 1.1% and EUROSTOXX 50 futures 0.7%.
South Korea lagged, in part as Japan tightened restrictions on exports of high-tech materials in response to a South Korean ruling on war-time forced labour.
Treasury futures slid 10 ticks as yields on 10-year notes edged up 4 basis points to 2.04%.
Fed funds dropped over 5 ticks as the market scaled back the probability of a half-point rate cut this month to around 15%, from nearer 50% a week ago.
Yet, no deadline was set for a trade deal and much damage has already been done, with two surveys of Chinese manufacturing showing activity contracting.
The official Purchasing Managers' Index (PMI) held at 49.4 in June, just missing forecasts, while the Caixin/Markit PMI dropped to 49.4, the worst reading since January.
Surveys from Japan and South Korea showed similar slowdowns.
"Although a worst case outcome has been averted, the threat of tariffs remains and it is unlikely the truce gives much confidence to firms' investment and hiring decisions," said Tapas Strickland, a director of economics at NAB.
"As such, it is likely that soft manufacturing conditions will persist until if and when a fuller agreement is fleshed out."
The reaction in currency markets was to strip some recent gains from safe harbours like the yen and Swiss franc. The dollar crept up 0.4% on the yen to 108.29 and 0.7% on the franc to 0.9828.
The dollar added 0.4% on a basket of currencies to 96.531 , while the euro eased to $1.1328. The dollar went the other way on the Chinese yuan, dipping 0.4% to 6.8403 .
The dollar's gains took some of the shine off gold, which fell 1.5% to $1,388.28 per ounce.
Oil prices sprang higher on news OPEC and its allies look set to extend supply cuts at least until the end of 2019 as Iraq joined top producers Saudi Arabia and Russia in endorsing the policy.
Brent crude futures rose $1.66 to $66.40, while U.S. crude gained $1.43 to $59.90 a barrel.
(Editing by Sam Holmes, Shri Navaratnam & Kim Coghill)