U.S. Fed's balance sheet shrinks in latest week

NEW YORK Oct 8 (Reuters) - The U.S. Federal Reserve's balance sheet shrank slightly in the latest week, Fed data showed on Thursday.

The Fed's balance sheet liabilities -- a broad gauge of its lending to the financial system -- fell to $2.120 trillion on Wednesday from $2.123 trillion a week ago.

Overnight direct loans to banks via the Fed's discount window averaged $110.54 billion per day in the latest week, up from $109.84 billion a day in the prior week.

Primary credit borrowings averaged $27.898 billion in the week ended Oct 7, versus $27.98 billion the previous week.

The Fed's holding of agency mortgage-backed securities dipped to $692.29 billion on Wednesday from $692.365 billion a week earlier, while its Treasuries ownership edged up to $769.19 billion from $769.16 billion a week earlier.

The Fed's liquidity swap lines with foreign central banks to provide dollars averaged $49.83 billion per day in the latest week, down from $56.76 billion per day in the prior week's average, according to Fed data.

The central bank's Commercial Paper Funding Facility assets totaled $41.06 billion on Wednesday, up from the prior week's $41.03 billion.

(Reporting by Richard Leong, Editing by Chizu Nomiyama)