* Long-dated U.S. yields rise from historic lows
* Mild profit-taking in 'deeply overbought' market cited
* Uncertainty about Europe, Fed policy stems losses (Adds comments, updates prices)
By Ellen Freilich
NEW YORK, June 5 (Reuters) - Long-dated U.S. Treasuries prices slipped o n T uesday as traders took profits after a recent rally that pushed yields to historic lows last week.
The 30-year bond led the way lower, falling as much as a point before trimming its loss to 25/32. Its yield rose to 2.61 percent from 2.57 percent on Monday.
"Treasuries had rallied so much over the last week and last month that we are just seeing some of that taken back yesterday and today," said Eric Stein, vice president and portfolio manager at Eaton Vance Investment Managers in Boston.
After benchmark 10-year Treasury yields touched an all-time low of 1.44 percent on Friday, they rose on Monday and Tuesday. The 10-year note was down down 3/32 in price. Its yield rose to 1.55 percent from 1.52 percent on Monday.
"The market met some resistance at 1.5 percent on the 10-year yield," said James Sarni, managing principal at Los Angeles-based Payden & Rygel, a firm with more than $60 billion in assets under management.
Sarni said the year began with an "enormous 'risk-on' trade" that pushed stocks up more than 11 percent. "Almost every non-Treasury asset did better," he noted.
Conversely, a "risk-off" trade that began after the first quarter was the catalyst for the drop in Treasury yields that pushed the 10-year yield to a historic low last week, he said.
"We're in the midst of that, but I still believe the natural habitat for 10-year yields is around 2 percent," Sarni said.
William O'Donnell, managing director and head of U.S. Treasury strategy at RBS Securities in Stamford, Connecticut, said some factors argued 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."
O'Donnell said even some of his firm's "most stridently bullish accounts have been selling in the last few days during this latest push lower in rates."
But investors still looked less than eager to abandon safe-haven U.S. government debt, even with stocks making gains on Wall Street and yields barely above historic lows. Losses across most of the yield curve were mild.
"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 a European Central Bank policy meeting on Wednesday, Federal Reserve Chairman Ben Bernanke's testimony before Congress on Thursday, Greek elections on June 17, and the outcome on June 20 of a two-day Federal Reserve policy meeting.
"Bernanke on Thursday is potentially huge," O'Donnell said.
Investors will be tuning in to the congressional testimony on Thursday to hear the Fed chairman's views on the intensity of downside risks to U.S. economic growth and to get a sense of 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."
A slightly higher-than-forecast reading on the Institute for Supply Management's non-manufacturing index for May had no lasting market impact.
(Editing by Jan Paschal)