EURO GOVT-Bunds dip on rebound in riskier assets, supply eyed
* Ultra-easy ECB policy outlook supports riskier assets
* Italian yields stable before zero coupon, linker debt sales
* The Netherlands, Belgium to sell short- to long-term bonds
By Emelia Sithole-Matarise
LONDON, May 28 (Reuters) - German Bund futures dipped on Tuesday, with signals the European Central Bank will keep policy ultra-easy supporting riskier assets.
The debt market took its cue from European shares, which edged back towards 5-1/2-year highs after ECB Executive Board member Joerg Asmussen said on Monday the bank would stick to its expansive monetary policy for as long as necessary.
Stock markets fell last week on concerns the U.S. Federal Reserve might start scaling back its stimulus programme.
"Equities seem to be stabilising and this is taking a toll on (U.S.) Treasuries and dragged Bunds lower. Ten-year Bund yields look like they are going to test 1.5 percent pretty soon," said RIA Capital Markets strategist Nick Stamenkovic.
The Bund future was 20 ticks down at 144.06 while German 10-year yields were up 1 basis point at 1.43 percent.
The Bund broke through a key technical level at 144.23, the 38 percent retracement of its rally between the end of January and the beginning of May, with volumes picking up as UK markets reopened after a holiday.
The next near-term support was at 143.87/91, the lows posted on March 18 and 25, said UBS technical analyst Richard Adcock.
"We would expect a short-term consolidation above the support level, but with bearish momentum and trending tools, a break is likely soon to trigger fresh downside to first the gap, then deeper 62 percent (retracement) level at 142.40," he said in a note.
Bunds were also coming under some pressure as traders made way for supply from the top-rated Netherlands of up to 3 billion euros of 10-year bonds.
Belgium aims to raise 2.9 billion to 3.9 billion euro in auctions of five-, 10- and 20-year benchmarks as well as a 2035 non-benchmark bond. Both auctions are expected to fare well as the countries offer higher yields than benchmark German debt, analysts said.
In lower-rated markets, Italian yields held steady before an auction of up to 3.5 billion euros of zero coupon and inflation-linked debt in a test of bond investor demand for peripheral bonds after they were caught up in last week's selloff in equity markets.
Equivalent Spanish yields were slightly lower at 4.32 percent.