* Investors seen snapping up new Greek 5-year bond
* Order book tops 20 billion euros - IFR
* Greek yields fall further below 6 percent
* Rest of euro zone market firmer after dovish Fed minutes (Updates with other euro zone markets opening, adds more comments)
By Emelia Sithole-Matarise
LONDON, April 10 (Reuters) - Greek yields dipped lower on Thursday as the country looked set for a strong bond market return two years after it defaulted, with a perceived softer U.S. policy outlook fuelling investor demand for riskier credits.
Minutes from the U.S. Federal Reserve's March policy meeting eased some worries the central bank might raise interest rates as soon as next year's first half, giving fresh legs to the relentless rally in peripheral euro zone bonds.
A car bomb blast in central Athens did little to rattle the market, with investors hunting for higher returns in an environment of low interest rates seen snapping up Greece's new five-year benchmark bond being sold via a syndicate of banks.
Athens aims to raise up to 2.5 billion euros from the sale. Investor interest topped 20 billion euros soon after books opened on Thursday for the bond with a 4.95 percent yield, sources close to the deal told IFR, a Thomson Reuters service.
"In terms of peripheral yields it's (Greek bond) obviously reasonably good value compared to some markets ... It's going to absolutely fly," one London-based trader said. He added the bond was more likely to be sold at an average yield around 5 percent than 5.25, given the strong indications of demand.
Greek 10-year yields were last 1 basis point lower at 5.91 percent, having broken below 6 percent on Wednesday for the first time since early 2010, before it was shut out of bond markets and forced to take an international bailout.
Some in the market said a yield below 4.90 percent would be the cheapest return for a bailed out euro zone country. Ireland, the first country to come back to market sold its five-year bond at a yield of 5.90 percent in July 2012 followed since months later by Portugal with similar maturity paper but a lower 4.90 percent cost.
GREAT MARKETING
Still, some market participants said although Greece's market comeback signalled that the worst of investor fears over the debt crisis had ebbed, concerns remain.
"In terms of marketing for Greece, it's great but I would be careful to draw conclusion that the crisis is over because the structural adjustment process is still ongoing," said Michael Leister, a strategist at Commerzbank.
"Even with a yield of 5 or 5.25 percent, they (Greece) are still paying more compared to the rescue packages so all things considered, it's not a particularly cheap deal for them but they are on the right track and shows the debt crisis has eased significantly."