UPDATE 1-U.S. Fed's balance sheet expands in latest week

(Adds details, link to graphic)

NEW YORK Nov 4 (Reuters) - The U.S. Federal Reserve's balance sheet expanded in the latest week, Fed data released on Thursday showed.

The balance sheet -- a broad gauge of Fed lending to the financial system -- grew to $2.283 trillion in the week ended Nov. 3 from $2.278 trillion the previous week.

The central bank's balance sheet is set to grow even more over the next eight months, as the Fed embarks on a second program to stimulate the economy by purchasing U.S. Treasury securities.

Fed balance sheet liabilities remain below their record high of $2.334 trillion hit in May. After declining early last year, the balance sheet surged amid the U.S. central bank's asset-buying program.

The program, known as quantitative easing, was broadly aimed at holding down borrowing costs and supporting the ailing housing market as the economy recovered from the worst recession in 70 years.

That effort was also led by the Fed's purchases of mortgage-related securities, which came to a conclusion at the end of March.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For a graphic of the Fed's balance sheet, see: link.reuters.com/buf92k

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

The Fed announced on Wednesday it would engage in another round of quantitative easing. It expects to have purchased a total of $600 billion under the new program by the middle of 2011.

The central bank has also been using cash from maturing mortgage bonds it holds to buy more government debt. To date it has purchased over $69.6 billion of Treasury inflation-protected securities and Treasuries under the program.

The Fed's holdings of U.S. Treasury securities rose to $842.0 billion as of Oct. 27 from $837.85 billion the previous week.

The Fed's holdings of mortgage-backed securities backed by housing finance companies Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) totaled $1.051 trillion on Nov. 3, unchanged from the previous week.

The U.S. central bank's ownership of debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Bank System was $149.68 billion on Nov. 3, also unchanged from the previous week.

Primary credit via the Fed's discount window averaged $64 million per day in the latest week versus $24 million per day in the previous week. (Reporting by Emily Flitter, Editing by Chizu Nomiyama)