Why the deadlock in this scenario?
Sybase ASE uses blocking locks for transaction isolation, meaning that readers block writers and writers block readers (unlike other databases which use versioning so that writers don't block readers and vice versa). 

So each SELECT is blocked by the exclusive lock taken out by the earlier UPDATE on the table it is selecting from, since that update was done by a different session (it wouldn't block if it was the same session). Since neither SELECT can proceed now, there is a deadlock.