TREASURIES-Bonds climb with safe-haven bidding on GSE worries

*Safe-haven bidding based on GSE worries

*Gains limited by some stock market strength

*Bernanke highlight on Friday in slow data calendar (Adds trader quote, updates prices)

By Chris Reese

NEW YORK, Aug 20 (Reuters) - U.S. Treasury debt prices rose on Wednesday as investors continued their search for safe-haven investments amid rising fears the government may have to bail out mortgage giants Fannie Mae and Freddie Mac.

Shares of Fannie Mae (FNM.N) and Freddie Mac (FRE.N) fell to their lowest levels in over 18 years after a Wall Street Journal report that Freddie executives were due to meet Treasury officials on Wednesday, perhaps to get clarity about how the government will support the company.

Investors fear the collapse of Fannie and Freddie could pose further risks to an already battered financial system, potentially exacerbating the housing slump and the credit crisis.

"You are seeing continued flight-to-quality (buying of bonds) over concern with what is happening to Fannie and Freddie," said Mary Ann Hurley, vice president of fixed income trading at D.A. Davidson & Co in Seattle.

Benchmark 10-year Treasuries US10YT=RR were trading 7/32 higher in price for a yield of 3.81 percent from 3.84 percent late on Tuesday, while 2-year Treasury notes US2YT=RR were unchanged in price for a yield of 2.30 percent.

Bond market price increases were capped however by stock market gains, where investors bought up shares of technology companies after Hewlett-Packard (HPQ.N) reported a strong profit and outlook.

With little in the way of significant economic data on tap through the rest of the week, bond traders are looking for further market direction from a speech on financial stability from Federal Reserve Chairman Ben Bernanke on Friday morning.

"Bonds will be quiet today as most await the Bernanke speech on Friday from Jackson Hole (Wyoming)," said Andrew Brenner, senior vice president at MF Global in New York, adding "we do not see 3.75 percent yield on the 10-year being broken on the upside until Friday."

Benchmark yields briefly fell to as low as 3.78 percent on Wednesday morning when the stock market moved into negative territory. That yield level marked the lowest in over a month.

Five-year Treasury notes US5YT=RR were trading 4/32 higher in price for a yield of 3.04 percent from 3.07 percent late on Tuesday, while the 30-year bond US30YT=RR was trading 12/32 higher for a yield of 4.45 percent from 4.47 percent. (Reporting by Chris Reese, Editing by Chizu Nomiyama)