TREASURIES-Steady in Asia, supported by Fed mortgage plan

* Treasuries steady, hold gains after Fed plan for mortgages

* Eyes on U.S. housing market and consumer sentiment data

By Kaori Kaneko

TOKYO, Nov 26 (Reuters) - U.S. Treasuries were steady in Asian trading on Wednesday, holding gains made the previous day after the Federal Reserve unveiled a plan to directly buy mortgage-related fixed income assets.

Longer-dated U.S. Treasuries surged on Tuesday as the Fed's announcement stoked investor demand for mortgage- and asset-backed securities, and that in turn triggered buying of Treasuries by dealers and investors looking to hedge their books.

The Fed said it would buy housing-related debt and securities with a $600 billion programme in an effort to free up mortgage lending. [ID:nLP703048]

"A positive outlook on mortgage-backed securities has emerged. And hopes for MBS prices to rise prompted investors to buy back Treasuries to adjust their positions, especially longer-dated ones," said Ryuji Shimai, senior market analyst at Shinko Securities.

Economic indicators underscoring the weakness in the overall economy and housing sector, as well as solid demand at a record-large auction of $26 billion in five-year notes, also supported Treasuries on Tuesday.

Data on Tuesday showed that the U.S. economy contracted at its fastest pace in seven years in the third quarter, and prices of U.S. single-family homes plunged by a record 17.4 percent in September from a year earlier.

Analysts said Treasuries could take a breather for now following last week's fierce rally, which sent 10-year yields tumbling to a five-decade low of around 2.99 percent, as many investors enter the Thanksgiving holiday this week.

But given persistent concerns about a global recession, U.S. Treasury yields were expected to have more room to fall.

"There is speculation about a possible zero interest rate policy by the Fed early next year. Taking this into consideration, there is a chance that the benchmark 10-year bond yield could fall below two percent," said Shimai.

The benchmark 10-year note US10YT=RR was unchanged in price for a yield of 3.111 percent, little changed from late U.S. trading on Tuesday.

The two-year note US2YT=RR was steady in price for a yield of 1.191 percent.

Later on Wednesday, investors will turn their attention to a batch of economic indicators, including data on new home sales, consumer sentiment, and weekly jobless claims. (Additional reporting by Eric Burroughs, Masayuki Kitano; Editing by Chris Gallagher)