TREASURIES-Steady rate outlook supports short end

* Short end draws support from stable Fed outlook

* Long-dated Treasuries underperform short end

* Upcoming supply, technical selling weigh on long end

* Productivity gain argues for low inflation (Adds analyst quote, updates prices)

By Chris Reese

NEW YORK, Nov 5 (Reuters) - Big gains in U.S. workers' productivity and expectations the Federal Reserve will keep interest rates new zero well into next year supported short-dated U.S. government debt prices on Thursday.

Meanwhile, a rally in stocks depleted the bid for safe-haven U.S. government debt as investors showed a willingness to shoulder riskier assets. Stocks rose on the productivity gains, which promised better corporate profits, as well as on data showing improvement in the jobs market.

Worries over pending government debt supply also weighed on longer-dated Treasury debt prices.

"We are still seeing the after-effects of the Fed statement yesterday," said Kim Rupert, managing director of global fixed income analysis at Action Economics LLC in San Francisco.

The Fed -- the U.S. central bank -- said on Wednesday it would hold benchmark interest rates steady near zero and reiterated rates would remain low for an "extended" period.

Two-year Treasury notes US2YT=RR yields, which are more sensitive to expectations of changes in the federal funds rate, eased to 0.89 percent from 0.91 percent late on Wednesday.

Thursday's government report showing a 9.5 percent jump in third-quarter productivity -- a six-year high -- with a 5.2 percent plunge in unit labor costs argued for subdued inflation, economists said. [ID:nN05106320]

"The third-quarter productivity gains would limit inflation concerns to some degree, which in this environment is probably more important for what it means for Federal Reserve policy, so it is helping to support the front end," said John Canavan, analyst at Stone & McCarthy Research Associates in Princeton, New Jersey.

At the same time, "positioning before next week's refunding weighs on 10s and bonds," Canavan said.

The Treasury will auction $40 billion in three-year notes, $25 billion in 10-year notes, and $16 billion in 30-year bonds next Monday, Tuesday and Thursday, respectively.

Technical pressures contributed to the market brew.