(Recasts and writes through)
By John Geddie
LONDON, Oct 4 (Reuters) - Italy sold its first 50-year bond on Tuesday as some investors bet the European Central Bank may soon add ultra-long debt to its asset-purchase stimulus scheme.
About 16.5 billion euros of orders were placed for the bond - 5-1/2 times the expected sale amount, despite concerns over Italy's banks and an upcoming referendum that could unseat its prime minister.
Many of the fund managers who lend to Italy - and those who have already bought 50-year bonds from France, Belgium and Spain this year - may not live to see it paid back. Those who signed up to Ireland's 100-year bond in March almost certainly won't.
But they could make quick gains if the ECB extends the maturity limit on its bond-buying scheme later this year, in an attempt to prolong its 1.7 trillion euro programme.
Analysts say such a move could be among tweaks expected in December to allow the central bank to continue quantitative easing beyond its scheduled end in March 2017.
"It is one of the least sensitive options from a political, technical and legal perspective," said Frederik Ducrozet, senior European economist at Swiss wealth manager Pictet.
Calculations by Allianz Global Investors show that extending QE to include bonds of up to 50 years maturity from 30 years could make around 80 billion euros of new debt eligible.
"We expect in December or before December a prolongation of the ECB's QE... We see them extending the buying horizon," said Brian Tomlinson, senior fixed income portfolio manager at Allianz GI, who has already bought 50-year bonds from France and Belgium this year.
Tomlinson said the ECB could open up around a further 120 billion euros of bonds if it buys debt with maturities of 18 months, below its current limit of two years.
But many of these bonds, especially in the likes of Germany, yield less than the ECB's minus 0.4 percent deposit rate, which marks the cut-off for purchases. Analysts said these yield limits would also need to be changed to make such an extension effective.
Yields on Italy's outstanding bonds rose slightly on Monday, as often happens when investors make room in their portfolios for new supply, but they remain near record lows touched at the start of 2015.
Thirty-year yields rose 3 basis points to 2.29 percent , having fallen steadily from highs of nearly 8 percent touched in the bloc's 2011 debt crisis, and were just above a record low 1.92 percent seen in March 2015 around the launch of QE.
Italian bonds have underperformed other euro zone debt in recent months before a Dec. 4 referendum on constitutional reform on which Prime Minister Matteo Renzi had earlier staked his career.
Some analysts had expected this political uncertainty, coupled with concerns about the country's ailing banks, to affect demand for the new bonds.
Mizuho strategist Peter Chatwell said earlier on Tuesday that Italy should aim to match the 3 billion euros raised in Spain's 50-year issue in May, but that "more challenging issuance conditions ahead of December's constitutional referendum make a range of 2 to 3 billion euros more likely". (Reporting by John Geddie; Additional reporting by Marc Jones and Dhara Ranasinghe; Editing by Larry King and Hugh Lawson)