TREASURIES-Rally on mortgage-related buying, stock slide

* Mortgage hedging, late stock stumble push prices higher

* Long-dated Treasuries up on view Fed could buy them

* European central banks aggressively cut interest rates

* Weak Nov employment data anticipated; report due Friday

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By Ellen Freilich

NEW YORK, Dec 4 (Reuters) - U.S. Treasuries prices rallied on Thursday, propelled by hedging as mortgage rates fell and by the continuing flight to the safety of government debt as stocks fell further.

The jump in home owners refinancing their mortgages as rates fall has created a need to buy long-dated Treasuries as a hedge for mortgage portfolio managers.

The Federal Reserve's plan to buy mortgage securities to lower home loan rates is likely to also be followed by another cut in the central bank's benchmark interest rate in mid-December after what is likely to be another large rise in unemployment in Friday's monthly U.S. jobs report, analysts said.

"Convexity buying and a strong need to replace mortgage paper led the rally," said Andrew Brenner, senior vice president at MF Global. "There's a need for duration."

A late stock slide that sent major U.S. stock indexes down two to three percent fed the bid for safe-haven government debt.

The bid for Treasuries was already active, however, following big interest-rate cuts by European central banks and ahead of the U.S. government's monthly employment report which should show that non-farm payrolls shed 340,000 jobs last month, a median estimate from economists polled by Reuters.

By the end of the day, Treasuries prices were up across the maturity curve, but for most of the session, long-dated Treasuries enjoyed the hottest demand.

Analysts observed that two-year notes were already below the Federal Reserve's benchmark federal funds rate of 1.0 percent, though that rate is expected to be cut by another half-percentage point next week and perhaps to zero next year.

In contrast, they said, the Fed had indicated, most recently in comments by Fed Chairman Ben Bernanke, that the Fed could purchase "substantial quantities" of longer-term securities issued by the U.S. Treasury or government-sponsored agencies in an effort to lower yields and stimulate demand.

"The Fed has limited scope to cut short-term rates, but it has said that it may begin targeting long-term interest rates so one has the Fed on one's side when purchasing long-term maturities right now," said Tony Crescenzi, chief bond market strategist at Miller, Tabak & Co. in New York.