EURO GOVT-Bunds rise; equities, periphery to drive mkt

LONDON, Sept 7 (Reuters) - Euro zone government bonds edged up at Tuesday's open, supported by losses in equities overnight, and having stabilised the previous day after three sessions of steep losses.

Bunds were also supported by a Wall Street Journal report, which stoked fears about the viability of European banks by highlighting the weakness of euro zone stress tests earlier in the year.

At 0604 GMT, September Bund futures FGBLc1 were up 21 ticks at 132.37. Two-year bond yields DE2YT=TWEB were little changed at 0.629 percent, with 10-year yields DE10YT=TWEB down almost 2 bps at 2.318 percent.

"We'll watch stocks and watch the periphery, but the periphery seems to be in the ascendancy in terms of driving the market," a bond trader said.

"It feels like (Bunds) found a bottom for the time being, they traded well yesterday."

Peripheral issues were pressured on Monday, particularly Belgian bonds on the back of heightened political uncertainty.

Japan's Nikkei stock average .N225 fell 1 percent on Tuesday, dented by profit-taking after four straight days of large gains and European stock index futures eased.

In supply, Austria will auction 1.9 billion euros of 2019 and 2026 government bonds.

"Going into this week's substantial supply, it remains to be seen just what appetite for bonds investors have, once they no longer believe in economic or credit meltdown scenarios," Credit Agricole strategists said.

Supply this week totals around 11 billion euros with Germany and Portugal also coming to market, but redemption and coupon payments of around 19 billion euros should support the sales [EURODEBT/O].