TREASURIES-Edge higher in Asia before Fed, data

By Rika Otsuka

TOKYO, Jan 30 (Reuters) - U.S. Treasuries edged higher in Asia on Wednesday as investors waited to see the size of a widely expected Federal Reserve interest rate cut following last week's hefty emergency move.

Many market participants bet the U.S. central bank will lower the federal funds rate by half a percentage point to 3.0 percent after a two-day meeting ending later in the day.

Last week the Fed slashed interest rates by 75 basis points, its biggest rate cut in a quarter century, to fight against the threat of a U.S. recession this year. Some traders, however, trimmed their bets for an aggressive Fed move, now expecting a quarter percentage point rate cut after Tuesday's solid data on durable good orders in December.

Investors took a wait-and-see stance on Wednesday as a 25 basis point rate cut could prompt those who have expected more aggressive monetary easing to dump Treasuries.

At the same time, a less aggressive move by the Fed is likely to spark a stock sell-off, prompting investors to seek the safety of government debt.

"One cannot say that a smaller cut is negative for Treasuries and a bigger one is positive," said Akihiro Nishida, senior economist at Mitsubishi UFJ Securities. "This time it's not that simple."

Benchmark 10-year notes US10YT=RR rose 6/32 in price to yield 3.656 percent, down nearly 3 basis points from the previous day's U.S. trade.

Two-year notes US2YT=RR were unchanged to yield 2.291 percent.

Treasury 10-year futures TYv1 slipped 1/32 to 116-16/32.

Besides the Fed rate verdict, investors were awaiting a post-meeting statement, the initial estimate of fourth-quarter gross domestic product and data on private payrolls from ADP Employer Services for clues to the Fed's monetary policy after this month.

"Few expect the Fed will stop slashing interest rates this month even if it delivers a half percentage point rate cut today," said Mitsubishi UFJ's Nishida.

The ADP jobs report is likely to affect expectations for the government's monthly employment data due on Friday.

Economists in a Reuters survey forecast annualised gross domestic product growth of 1.2 percent in the fourth quarter. [ECI/US] (Editing by Mike Miller)