* Expectations of Fed easing help boost Treasury purchases
* China, Japan raise Treasury buying; overall inflow slips (Adds detail from report, comment, byline)
By Steven C. Johnson
NEW YORK, Oct 18 (Reuters) - Foreigners were heavy buyers of long-term U.S. securities in August and nearly tripled purchases of U.S. government debt, the U.S. Treasury Department said on Monday.
Net purchases of long-dated securities swelled to $128.7 billion in August from $61.2 billion the prior month.
Overseas investors poured most of that into U.S. Treasuries, snapping up a net $117.1 billion. That was the most since November and far above July's total of $30 billion.
China, the biggest buyer of U.S. Treasury debt, raised its total holdings by $21.7 billion to $868.4 billion. Japan, the No. 2 Treasury holder, bought a net $15.6 billion in August, bringing its total to $836.6 billion.
Treasuries rallied sharply in August after the Federal Reserve hinted it could buy more Treasury debt to push down interest rates and jolt a sluggish U.S. economy back to life.
The Fed bought some $300 billion in U.S. Treasury debt in 2009 and more than $1 trillion in mortgage-backed securities in a first round of what markets call "quantitative easing."
Win Thin, senior currency strategist at Brown Brothers Harriman, said much of the buying was tied to fear in early August that the United States might be heading for a double-dip recession and then by expectations that the Fed would try to prevent that with a second dash of quantitative easing.
"The bottom line is the money kept flowing into the long end as you would expect, though people did lighten up on the short end," he said.
Net overall inflows, which include short-dated securities such as Treasury bills, slipped to $38.9 billion in August from a downwardly revised $63.3 billion, the data showed.
LOOKING AHEAD
Analysts said foreigners likely remained enthusiastic Treasury buyers in September, as central banks increased intervention in the foreign exchange market to prevent their currencies from rising too quickly against a falling dollar.
But Kathy Lien, director of research at GFT Forex, said a rise in the Chinese yuan against the dollar in September suggests China may have slowed its Treasury buying.
"We don't expect Japan, Brazil and Korea's appetite for dollars to change - in fact it probably strengthened because of intervention last month," she said. "China on the other hand allowed its currency to hit a record high which means they may have cut back their demand for dollars materially."
The flood into Treasuries in August caused foreigners to trim purchases of other U.S. assets. Net equity purchases retreated to $4.8 billion from $12.5 billion while net corporate debt purchases slipped to $10 billion from $13.9 billion.
Overseas investors bought a net $4.6 billion in U.S. agency debt, compared to $17.3 billion in July. (Editing by James Dalgleish)