(Adds analyst quote)

By Chris Reese

NEW YORK, Feb 11 (Reuters) - A record-large monthly sale of 10-year Treasury notes drew near-average demand on Wednesday, alleviating some fears that buyers might stay away in the face of an expected huge wave of further debt supply.

Appetite for 10-year debt was closely watched by Wall Street as well as Main Street because its yield is a rate benchmark for home mortgages and other consumer loans.

Indirect bidders, including foreign central banks and customers of primary dealers, snapped up 38 percent of the $21 billion offered, just above the average of 34 percent in the four auctions of new 10-year notes in 2008.

The bid-to-cover ratio, another measure of demand, was 2.21, just below the average bid-to-cover ratio of 2.34 in the same four auctions last year.

"Generally speaking, the auction went OK," said Andrew Brenner, senior vice president at MF Global in New York.

Analysts had worried that dealers might shy away from the notes when they expect the Treasury to issue a massive amount of new debt in coming months to fund various government programs intended to prop up the financial industry.

Government debt is expected to soar to $1.5 trillion to $2.5 trillion in fiscal 2009, and some investors are skeptical the market will be able to digest all of the new debt issuance.