* Bonds set for longest winning run since 2008 * Benchmark yields fall to lowest in over 2 weeks * U.S. Treasury to sell $35 billion in 5-year notes * U.S. new home sales seen rising to highest since 2010 By Richard Leong NEW YORK, Sept 26 U.S. government debt prices rose on Wednesday for an eighth straight session as worries that Spain's reluctance to ask for a full-blown bailout would prolong Europe's debt crisis stoked fresh safe-haven bids for bonds. The Treasuries market was on track to match its longest winning streak since late November to early December 2008, according to Reuters data. Longer-dated U.S. yields touched their lowest levels in more than two weeks since they spiked earlier this month in reaction to the Federal Reserve's announcement of a third large-scale bond purchase program, nicknamed QE3. In the face of renewed appetite for U.S. federal debt, the Treasury Department will sell $35 billion of new five-year securities on Wednesday, part of this week's $99 billion in note supply. "Things are bumpy again in Europe. You are seeing more tension there that's leading to a predictable rally on the long end," said Eric Green, global head of rates and FX research and strategy with TD Securities in New York. With Spain's borrowing costs rising again and a key region threatening to secede, Spanish Prime Minister Mariano Rajoy hinted he was ready to request for a rescue for the euro zone's fourth biggest economy. He told the Wall Street Journal on Wednesday he would make the move if Spain's debt costs remained too high for too long. The yield on 10-year Spanish debt rose to 6 percent on Wednesday, a threshold which analysts considered unsustainable. Spain's 10-year borrowing cost has been running above 6 percent since mid-May. Back in the United States, benchmark 10-year notes were last up 9/32 in price to yield 1.64 percent, its 100-day moving average. The 10-year yield was 3 basis points lower from late on Tuesday. The 10-year note yield has fallen about 25 basis points from a four-month peak set on Sept. 14, the day after the Fed announced it would purchase an additional $40 billion a month in mortgage-backed securities in a bid to stimulate the economy. Increased MBS purchases from the Fed pushed home borrowing costs to a record low. The Mortgage Bankers Association said the average 30-year mortgage rate fell to 3.63 percent in the week ended Sept. 21, the lowest since it began tracking it. Traders will likely receive more encouraging news on the housing market. The government will release at 10 a.m. (1400 GMT) its August figures on new home sales, which are expected to have risen to an annualized rate of 380,000 units which would be the strongest pace since April 2010.