TREASURIES-Edge up in Asia on bargain hunting

* Bargain hunters emerge on dips in U.S. equity futures

* Upside capped as housing-related data due this week

* This week's 2- and 5-yr auctions also limit gains

* Trading sparse

By Shinichi Saoshiro

TOKYO, Aug 25 (Reuters) - U.S. Treasuries edged up in Asia on Monday, rebounding from losses suffered at the end of last week as bargain hunting emerged after U.S. equity futures dipped in Asian trade.

In a thin market, gains were limited ahead of U.S. housing-related data that will be closely watched for any impact on mortgage lenders Fannie Mae (FNM.N) and Freddie Mac FRE.E, as well as an upcoming supply of two- and five-year government debt.

Data this week includes July existing home sales on Monday and July new home sales and Standard & Poor's/Case Shiller home price index on Tuesday.

The U.S. housing market is going through its worst slump since the Great Depression, with expectations growing that Fannie Mae and Freddie Mac will need a government bailout. [ID:nN22474920]

"The housing figures due to be released could point to a further deterioration in the U.S. housing market, which may increase the likelihood of a government bailout," said Keisuke Fukuda, a fixed-income strategist at Mitsubishi UFJ Securities.

"Any likelihood of more government spending to fund the bailouts will add pressure on yields to rise," he said.

The 10-year benchmark yield US10YT=RR reached 3.90 percent on Friday, the highest in a week, as safe-haven bids for government bonds were unwound on the back of a surging stock market.

Market participants are also eyeing upcoming supply to cap any bond gains. The Treasury will sell two-year notes on Wednesday and five-year notes on Thursday. It will announce the auction amounts later on Monday.

Benchmark 10-year Treasuries rose 4/32 in price from late U.S. trade on Friday to yield 3.855 percent.

Two-year notes US2YT=RR rose 1/32 in price to yield 2.390 percent.

September 10-year futures TYv1 rose 4/32 to 116-4.5/32.

JGBs advanced on Monday, with the September 10-year futures 2JGBv1 spiking to a four-month high on short-covering and an operation by the Bank of Japan to buy JGBs outright from the market. [JP/] (Editing by Edwina Gibbs)