The Federal Reserve's balance sheet expanded to a record size in the latest week, as the central bank bought more bonds in an effort to support the economy, Fed data released on Thursday showed.

The purchase was part of its $600 billion program, dubbed QE2, aimed at stimulating investment and economic activity.

The balance sheet -- a broad gauge of Fed lending to the financial system -- expanded to $2.759 trillion in the week ended May 25 from $2.742 trillion the prior week.

The central bank's holding of U.S. government securities grew to $1.519 trillion on Wednesday from last week's $1.495 trillion total.

The central bank has signaled it will complete QE2 at the end of June, but will continue to reinvest proceeds from the bonds as they mature.

The Fed's ownership of mortgage bonds guaranteed by Fannie Mae, Freddie Mac and the Government National Mortgage Association (Ginnie Mae) fell to $917.86 billion, from $923.58 billion the previous week.

The Fed's holdings of debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Bank system declined to $119.09 billion from $120.76 billion a week earlier.

The Fed's overnight direct loans to credit-worthy banks via its discount window averaged $11 million a day in the week ended Wednesday, compared with an average daily rate of $3 million last week.

(Reporting by Karen Brettell; Editing by Chizu Nomiyama)

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