* Bund futures ease as equities rally
* Bunds still within sight of 2-month highs hit last week
* Fed outlook underpins demand for both equities and bonds
* Italian yields edge up as 9 bln euros of debt sales eyed
By Emelia Sithole-Matarise
LONDON, Oct 28 (Reuters) - German Bund futures slipped onMonday as solid earnings lifted stocks but losses were temperedby expectations the Federal Reserve will maintain the size ofits bond purchases at a policy meeting this week.
Bunds hit two-month highs last week after below-forecastGerman sentiment and euro zone manufacturing and service sectorsurveys raised concern about the bloc's recovery.
Focus this week is on the Fed's two-day meeting starting onTuesday. Analysts widely expected the Fed will not begintrimming its bond purchases until early next year to lessen theeconomic impact of a two-week government shutdown.
U.S. economic reports this week, delayed by the shutdown,are expected to support the view that the Fed needs to maintainstimulus to support a recovery that has slowed in recent weeks.
This has helped both safe-haven bonds and riskier assetssuch as shares. Europe and Asian stocks rose on Monday.
"Bunds have ticked down a little bit after Asian equitymarkets ticked higher but they still look pretty wellunderpinned," said Nick Stamenkovic, a strategist at RIA CapitalMarkets.
"Any strong data this week will be shrugged off by themarket and any data that's weak will reinforce the market viewthat the Fed is not going to taper until next year."
The Bund future was 6 ticks lower at 141.00, off atwo-month peak of 141.22 hit last week, while German 10-yearyields were 0.7 basis points up at 1.76 percent.
Among lower-rated euro zone bonds, Italian 10-year yields were 1.1 bps up at 4.23 percent before sales thisweek of 9 billon euros of conventional and inflation-linkeddebt. Equivalent Spanish yields were flat at 4.15 percent.