TREASURIES-Hold firm in Asia, 7-year auction eyed

* Treasuries hold firm after previous day's tumble

* Focus on $24 bln 7-year note auction later in the day

* Fed's purchase programme seen offering some price support

* Five-year bonds sag after poor auction

By Satomi Noguchi

TOKYO, March 26 (Reuters) - U.S. Treasuries held firm in most maturities on Thursday in Asia, recovering some of the previous day's losses with investors looking ahead to the last leg of this week's $98 billion in bond issuance.

The Treasury is set to auction $24 billion of seven-year notes later in the day, the second sale of the maturity since 1993 after the first auction last month.

Analysts said the market was drawing support from the Federal Reserve's debut purchase of government bonds on Wednesday. The Fed bought $7.5 billion in Treasuries maturing in the next seven to 10 years.

However, analysts also warned the market was likely to see a tug-of-war between expectations for the Fed's bond buying, and fears that investors may not have sufficient appetite for the surging debt supply to finance the ballooning U.S. deficit.

Five-year Treasury notes extended losses after a record large auction of the maturity on Wednesday was met with below-average demand, despite strong demand at an auction of two-year notes on Tuesday.

"The market has mixed sentiment. On the one hand there are expectations for the Fed's bond purchases, and on the other there are concerns about investor demand," said Yasutoshi Nagai, chief economist at Daiwa Securities SMBC.

"The market still respects the Fed's credibility, so yields are likely to be kept low," he said.

The benchmark 10-year note rose 5/32 in price to yield 2.781 percent, down about 2 basis points from late U.S. trade.

The 10-year yield climbed to its highest point since last Wednesday, when the Fed's surprise announcement of its purchase programme triggered the biggest one-day drop in yields in more than two decades.

The seven-year note edged up 2/32 in price to yield 2.337 percent, down 1 basis point.

The five-year note fell 22/32 in price to yield 1.846 percent, up 3 basis points.

Concern over burgeoning Treasury issuance to fund the government's costly stimulus package and bailout programmes came to the forefront early on Wednesday, after Britain suffered its first failed government bond auction since 2002. [ID:nLP456926]

But analysts said the incident did not have a lasting impact on the bond market, while the spike in New Zealand yields was also having little influence on U.S. Treasuries.

sources from reuters,Editing by Chris Gallagher