* Recent upbeat data pushes Bunds lower in thin trade
* Worries remain about the euro zone outlook
* ECB, Fed not expected to make waves
By Marius Zaharia
LONDON, April 3 (Reuters) - German government bonds fell on Tuesday after solid U.S. and Chinese economic data made low-risk assets look expensive to some investors, but losses were seen limited by a weaker euro zone outlook.
Markets expect European Central Bank President Mario Draghi to acknowledge the relative weakness of the bloc's economy in comments after Wednesday's interest rate-setting meeting and suggest a wait-and-see attitude.
"Bunds are poor value ... the global economy is not in such a bad state as people feared," RIA Capital Markets bond strategist Nick Stamenkovic said.
He expected the ECB to "keep its powder dry" and saw 10-year German Bund yields heading to last week's high around 1.90 percent in the near term. At that level, investors worried about the risk of a fiscal slippage in Spain might be interested in buying Bunds again, he said.
Ten-year German government bonds last yielded 1.825 percent, 2.2 basis points higher on the day.
The main risk to investors' expectations of a neutral tone from the ECB is that Draghi could signal he might give in to pressure from some of his colleagues who think the bank needs to prepare to withdraw some of the 1 trillion euros of cheap three-year funds it injected into the banking system.
"The Bundesbank is increasing the pressure (on Draghi) to come up with at least some teasing words to calm down (inflation worries)," said Michael Leister, rate strategist at DZ Bank.
Such an outcome could increase selling pressure on bonds across the euro zone, especially in highly indebted Spain and Italy, whose markets benefited the most from the ECB's cash injections.
"(Markets) are looking for a fairly benign outlook. Talk of exit is a bit premature," one trader said.
Bunds would react less, as some cash withdrawn from peripheral markets would be re-invested in Germany. The technical picture also points to a narrow near-term range.
UBS technical strategist Richard Adcock said Monday's low in Bund futures would probably offer strong support as the contract gained sharply in the previous session after hitting that level. Highs from Friday and March 13 at 138.58 and 138.77 could act as barriers against further gains, he said.
The June contract last traded 28 ticks lower at 138.14.
Federal Reserve minutes due later on Tuesday are also expected to suggest a stand-by approach. The Fed is likely to continue to warn that premature tightening would be risky, while keeping an open-minded, but uncommitted view on further easing.
