TREASURIES-Dip in Asia on hope for Fannie, Freddie

* Concerns over Fannie, Freddie ease slightly

* Bonds lose some of their safe-haven appeal

* Five-year auction later in day eyed for near-term direction

* Japanese investors heavy sellers of foreign bonds last week

By Shinichi Saoshiro

TOKYO, Aug 28 (Reuters) - U.S. Treasuries dipped in Asia on Thursday on budding expectations that mortgage lenders Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) may not need a bailout, reducing the safe-haven appeal of government debt.

Fannie Mae on Wednesday announced a shake-up of top executives in an effort to better implement plans to preserve capital and cut losses, seen as a mildly positive sign by investors. [ID:nN27442677]

The price of the benchmark 10-year Treasury note <US10YT=RR> slid 3/32 from late U.S. trade to yield 3.775 percent. The two-year note <US2YT=RR> dipped 1/32 in price to yield 2.337 percent.

Shares of Fannie Mae and Freddie Mac have rallied this week as investors grew more confident there would be no government "nationalisation" that would wipe out their shareholdings.

Wall Street banks Merrill Lynch, Citibank and Goldman Sachs have this week questioned whether the U.S. Treasury would have to directly support Fannie Mae and Freddie Mac.

Merrill wrote in a note published on Tuesday that both have sufficient capital to offset losses for several quarters.

Treasuries fell earlier on Wednesday due to stronger-than-expected July durable goods orders, but rebounded after the Treasury shot down talk of an imminent announcement regarding Fannie Mae and Freddie Mac. After the Wednesday close, however, Fannie Mae announced the management reshuffle.

"Though flight-to-quality is still supporting Treasuries beneath the surface, Wednesday's gains were more about short term factors, like investors extending durations to match indexes," said Yasutoshi Nagai, chief economist at Daiwa Securities SMBC.

For near-term direction, market players are eyeing the $22 billion five-year note auction later in the day after Wednesday's $32 billion two-year auction drew lacklustre demand.

Data released by Japan's Ministry of Finance on Thursday showed that Japanese investors sold a net 1.42 trillion yen ($12.96 billion) in foreign bonds last week, the biggest amount sold on the ministry's data going back to January 2005. [JP/CAP]

Dealers speculated that investors opted not to roll over maturing U.S. bonds due to a lack of confidence in the greenback.  Continued...