WRAPUP 5-U.S. takes bold steps to shore up Fannie, Freddie

* Treasury, Fed unveil unprecedented steps to back GSEs

* Treasury says will up credit line, buy equity if needed

* Fed says will lend at discount rate to GSEs if needed (Adds Asian market reaction in 2nd paragraph, updates background in 3rd paragraph)

By Glenn Somerville and Alister Bull

WASHINGTON, July 13 (Reuters) - The United States on Sunday offered massive aid to Fannie Mae (FNM.N) and Freddie Mac (FRE.N) to bolster confidence in the mortgage finance giants and head off a potential meltdown in financial markets.

The dollar .DXY jumped and stock futures DJc1 rallied on the powerful message of support from the U.S. Treasury and the Federal Reserve, which also drew criticism for being a potential bailout that could cost U.S. taxpayers dearly. Major Asian markets opened firmer on news of the U.S. proposals.

Unveiling the emergency measures to calm markets roiled by the country's prolonged housing crisis, the Fed said Fannie and Freddie could have access to its emergency cash, echoing a move to backstop investment banks after the Fed orchestrated a takeover of ailing investment bank Bear Stearns in March.

The Treasury separately said it would temporarily boost its line of credit to the two mortgage financiers, as well as purchase equity in them, a step never taken before, if needed.

Both companies, which are shareholder-owned but also government-sponsored, said they are adequately capitalized, but welcomed the measures and said they would help confidence.

NERVES ON EDGE

Officials are desperate to calm nerves ahead of a crucial debt issue by Freddie Mac on Monday and after U.S. bank regulators on Friday seized mortgage lender IndyMac Bancorp IMB.N in the third-largest bank failure in U.S. history.

"(Their) continued strength is important to maintaining confidence and stability in our financial system and our financial markets. Therefore, we must take steps to address the current situation as we move to a stronger regulatory structure," U.S. Treasury Secretary Henry Paulson said in a statement that he read on the steps of the Treasury building.

A senior Treasury official said all the actions it proposed need congressional approval, but expressed confidence that could be secured this week.

A spokesman for Speaker of the House of Representatives Democrat Nancy Pelosi said she would work with the Republican administration of President George W. Bush on this matter.

Shares in the two mortgage giants, which own or guarantee just under half of the country's $12 trillion in outstanding mortgage debt, have been hammered by concerns that they might run out of capital amid mounting home-loan losses.

On Sunday the Securities and Exchange Commission stepped in to warn against rumor-mongering of any kind against any firm.