UPDATE 1-U.S. Fed balance sheet swells on bond purchase

(Adds details)

NEW YORK, Dec 16 (Reuters) - The U.S. Federal Reserve's
balance sheet grew for a seventh consecutive week to a record
due to its purchases of Treasuries, Fed data released on
Thursday showed.

Last month, the U.S. central bank started a second round of
quantitative easing, known as QE2, to tamp down interest rates
and help spur the economic recovery. The program is worth up to
$600 billion in U.S. government debt purchases over an
eight-month period in a bid to support growth.

The balance sheet -- a broad gauge of Fed lending to the
financial system -- expanded to $2.368 trillion in the week
ended Dec. 15 from $2.364 trillion the prior week.

Two weeks ago, the Fed's balance sheet surpassed the prior
peak of $2.333 trillion set in May as it was about to end its
first round of bond purchases that involved $300 billion of
Treasuries and $1.425 billion in mortgage-related securities.

The Fed's QE2 program follows its use of proceeds from
maturing mortgage securities in its portfolio, a move that
started in August. Since that time, it has purchased about $196
billion in Treasuries. [ID:nN20EDTABL]

The central bank's holding of U.S. government securities
totaled $967.55 billion on Wednesday, up from $949.61 billion
last week.
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For balance sheet graphic: link.reuters.com/buf92k
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On the other hand, the Fed's ownership of mortgage bonds
guaranteed by Fannie Mae (FNMA.OB), Freddie Mac (FMCC.OB) and
the Government National Mortgage Association (Ginnie Mae) fell
to $1.009 trillion from $1.023 trillion a week ago.

The Fed's holdings of debt issued by Fannie Mae, Freddie
Mac and the Federal Home Loan Bank system declined to $147.88
billion from $148.18 billion a week earlier.

Meanwhile, the Fed's overnight direct loans to
credit-worthy banks via its discount window averaged $22
million a day in the week ended Wednesday, slower than the $38
million daily pace last week and $191 million daily rate two
weeks earlier.
(Reporting by Richard Leong; Editing by James Dalgleish)