NEW YORK (CNN/Money) - Bond prices turned sour in afternoon trading Tuesday as stocks broke into positive ground, reinforcing a tendency for investors to pocket early gains that followed a flimsy manufacturing report.

Even as U.S. factories fired more workers, the Institute for Supply Management's barometer of national industry edged up to 49.8 in June from 49.4 in May, well short of forecasts for a reading of 51.0.

That left the gauge below the 50.0 level that divides growth and contraction for the fourth straight month, fueling an early rally in the bond market.

But the bounce was short-lived as traders were lured away by an improved tone in the equity markets. Analysts cited a general tendency of the market to trade in a tight range since the Federal Reserve's slim quarter-point rate cut last week.

"The momentum indicators moved into negative territory last week," said Sharon Stark, chief fixed income market strategist for Legg Mason in Baltimore, referring to technical averages closely watched on trading floors. "As a result, traders are going to sell into any sort of uptick."

And sell they did, reversing the bump higher that followed the ISM data.

At around 4:00 p.m. ET, the benchmark 10-year note fell 11/32 of a point to 100-17/32, pushing its yield to 3.56 percent from 3.52 percent late Monday. The 30-year bond lost 21/32 of a point to 112-3/32 and the yield rose to 4.60 percent from 4.56 percent.

The two-year note was unchanged at 99-20/32 with its yield at 1.31 percent, while the five-year note fell 5/32 of a point to 100-26/32, with a yield of 2.44 percent.

The dollar also fell after the manufacturing report nipped budding optimism that the U.S. economic recovery was gaining steam and overshadowed even grimmer manufacturing data from Europe.

The euro rose to a session high $1.1610 after the ISM data came out, but trimmed back to $1.1566, slightly higher from Monday's New York close of $1.1515. On Monday, the euro hit a six-week low of $1.1395.

The dollar fell to ¥119.04, before bouncing back to ¥119.46, still down from ¥119.72 on Monday.  

-- Reuters contributed to the story