* U.S. yields rise from historic lows
* Profit-taking in 'deeply overbought' market cited
* Uncertainty about Europe, Fed policy limits losses (adds comments, context, updates prices)
By Ellen Freilich
NEW YORK, June 5 (Reuters) - U.S. Treasuries prices slipped o n T uesday as traders took profits after a recent rally that last week pushed yields to historic lows.
The 30-year bond led the way lower, falling as much as a point before trimming its loss to half a point. Its yield rose to 2.60 percent from 2.57 percent on Monday.
"This is nothing more than a continued technical backup in rates," said Ian Lyngen, senior bond strategist at CRT Capital Group in Stamford, Connecticut.
"We've had deep, overbought market conditions for some weeks now and, of course, after last week's post-payrolls plunge in yields, we are even more overbought now," said William O'Donnell, managing director and head of U.S. Treasury strategy at RBS Securities in Stamford, Connecticut.
O'Donnell cited some fundamental factors that could argue for higher Treasury yields.
"Stocks are beginning to stabilize. There's growing evidence the U.S. housing market has stabilized so it's no longer likely to be a drag on growth or household wealth," he said.
But mainly, "People are getting bond market vertigo with 10-year yields at 1.5 percent," O'Donnell said. "There's not much meat on the bone no matter how worried you are about Europe.
"Even some of our most stridently bullish accounts have been selling in the last few days during this latest push lower in rates," he said. "We saw pretty decent selling out of Asia in 5s through 10s yesterday and more again last night."
But investors seemed less than eager to abandon safe-haven U.S. government debt. S&P stocks indexes opened lower and talks among the Group of Seven industrialized nations concluded without a statement. Even with yields barely above historic lows, losses across most of the yield curve were mild.
Benchmark 10-year notes were down 4/32 in price, their yields rising to 1.55 percent from 1.52 percent on Monday. Benchmark 10-year Treasury yields on Fr iday touched an all-time low of 1.44 percent.
"Our widespread anecdotes suggest legions of buyers will emerge on a drop in bond prices and blip up in rates so it's my best guess 10-year Treasuries will chop sideways in a 1.50 percent to 1.70 percent range because we still have a lot of events to clear," O'Donnell said.
Investors are focused on the Greek elections June 17 and a Federal Reserve policy meeting on June 20. And Federal Reserve Chairman Ben Bernanke testifies before Congress on Thursday.
"Bernanke on Thursday is potentially huge," O'Donnell said.
Investors will be tuning in to the Congressional testimony to hear the Fed Chairman's views on the intensity of downside risks to U.S. economic growth and to get a feel for whether the Fed might make monetary policy more accommodative in an effort to spur economic growth.
Spain also tests the market on Thursday with an issue of up to 2 billion euros ($2.5 billion) in medium- and long-term bonds at auction. The country's Treasury minister Cristobal Montoro said on Tuesday that Spain's high borrowing costs mean it is effectively shut out of the bond market and that the European Union should help Madrid recapitalize its debt-laden banks.
"It's an event a day so that will keep 10-year Treasury yields contained," O'Donnell said. "We're nervously chopping sideways. At the moment, we have some better selling." (Editing by Theodore d'Afflisio)