TREASURIES-Bonds rise as stocks skid, 1-mo bill rate near zero

*Bonds climb on safety bids as investors dump stocks

*Proposed bank bailout changes compound recession fears

*One-month T-bill rate falls near zero percent

*Record $20 bln in 10-yr note sale fetches solid bids

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By Richard Leong

NEW YORK, Nov 12 (Reuters) - U.S. government debt prices rose on Wednesday with the one-month bill rate falling near zero percent, as nervous investors dumped stocks and other risky assets in favor of cash and bonds.

Fears of a deep global recession crushing consumer spending and corporate profits fueled a stampede from stocks into safe-haven assets for a third straight session, analysts said.

The stock market's sell-off accelerated after U.S. Treasury Secretary Henry Paulson proposed changes to the $700 billion government bailout program, shaking confidence in its ability to help a fragile banking system and a swooning economy. [ID:nN12393760] In late afternoon trading, the three major U.S. stock indexes .DJI .SPX .IXIC were down 4.1 percent to 4.6 percent.For more, see [.N]

Paulson said more money from the Troubled Asset Relief Program, known as TARP, should be used to meet the capital needs of non-bank financial institutions rather than to buy damaged mortgage assets held by banks as originally intended.

Meanwhile, this week's supply of Treasuries, led by the $55 billion November refunding, has been well received despite initial concerns that the vast debt amount to finance a ballooning budget deficit will suppress demand.

"What has overwhelmed the supply issue has been a severely weak economy, which makes it hard for Treasury yields to rise," said Jim Grabovac, portfolio manager at McDonnell Investment Management in Chicago.

The U.S. Treasury sold a record $20 billion in new 10-year notes, two days after it reintroduced three-year debt. It will conclude this quarter's refunding with a $10 billion reopening of a previous 30-year bond issue on Thursday. For more on the latest 10-year auction, see [ID:nTAR000796]

Overall demand for the fresh 10-year note supply was just below average, but it was offset by solid participation among indirect bidders that include big money managers and foreign central banks, according to analysts.

In the secondary market, 10-year Treasuries US10YT=RR gained 23/32 in price to 102-21/32. Their yield, which moves opposite to price, was 3.67 percent, the lowest in more than three weeks and down from 3.76 percent late on Monday.

Two-year notes US2YT=RR added 6/32 in price to 100-20/32 with their yields easing to 1.17 percent, the lowest since June 2003, from 1.27 percent on Monday.