CORRECTED - CORRECTED-TREASURIES-Fall in Asia on inflation fears

(Corrects swap spread levels in paragraph 13)

* Oil's rebound above $121 a barrel stokes inflation fears

* Possible bailout plan for Fannie, Freddie in focus

* Investors await Bernanke's view on credit crisis

By Rika Otsuka

TOKYO, Aug 22 (Reuters) - U.S. Treasuries edged down in Asia on Friday as a rebound in oil prices reheated inflation worries, prompting investors to trim their holdings of government debt.

Investors were also reluctant to take fresh positions before hearing what Federal Reserve Chairman Ben Bernanke has to say about the credit market and financial sector, which has been battered by losses in mortgage-related investments.

Bernanke will speak on financial stability at the Kansas City Fed's annual symposium in Jackson Hole, Wyoming. [ID:nN21283859]

"Market participants will pay close attention to Bernanke's remarks, knowing that Fed chiefs have made some important comments at the symposium in the past," said Yasutoshi Nagai, a senior economist at Daiwa Securities SMBC.

"Bernanke is likely to say how serious the Fed is in tackling the financial woes," said Nagai, adding that such comments could move Treasury prices. But losses in Treasuries were limited by growing speculation that Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) are on the verge of a bailout.

Doubts about the health of the big mortgage financing firms have reminded investors that the housing-related troubles continue to hurt the U.S. financial sector as well as the broader economy.

That has supported save-haven buying of Treasuries, pushing down the benchmark 10-year Treasury yield to a one-month low.

Speculation is mounting that the U.S. government may need to take steps to rescue Fannie Mae and Freddie Mac by injecting capital. Whether the government unveils such a bailout plan is now the market's focal point.

September 10-year futures TYv1 fell 3/32 to 116-7/32, down from a four-month peak of 116-27.5/32 hit the previous day.

Benchmark 10-year notes <US10YT=RR> were down 4/32 in price to yield 3.846 percent, up 1.5 basis points from late U.S. trade on Thursday. The yield hit a one-month trough below 3.78 percent this week.

Two-year notes <US2YT=RR> dipped 1/32 in price to yield 2.334 percent, up 1.5 basis points.  Continued...