UPDATE 1-Fed says selling Treasury coupons to drain reserve

(Updates with details on operation)

NEW YORK, April 2 (Reuters) - The U.S. Federal Reserve sold $5 billion of Treasury coupons to drain permanent U.S. banking reserves, the New York Fed said on Wednesday.

This type of operation helps the Fed to maintain its reserve and rate targets by offsetting other measures aimed to ease credit bottlenecks in the U.S. financial system, according to analysts.

The New York Fed, which conducts open market operations for the central bank, said it sold $1 billion of coupons from five outstanding Treasury issues whose maturities range from 07/31/09 to 11/15/09.

Fed funds last traded at 2.50 percent, above the Fed's current 2.25 percent target rate.

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(Reporting by Richard Leong, Editing by Chizu Nomiyama,)