* Prices up on Europe crisis, rising expectations of more US easing
* 5-yr yields also hit new low ahead of auction later Wednesday
* Demand strong, though some investors wary of correction
TOKYO, July 25 (Reuters) - Benchmark U.S. Treasury yields fell to a record low in Asia on Wednesday on rising fears of the impact of Europe's debt crisis as well as heightened expectations of more stimulus from the U.S. Federal Reserve.
The 10-year yield slipped to 1.3908 percent, down from 1.403 percent in late North American trading on Tuesday, after falling as low as 1.3824 percent early in the Asian session.
"It is easy to buy Treasuries these days, considering the situation, but some are wary of a correction, with yields at these historically low levels," said Hiroki Shimazu, an economist in Tokyo at SMBC Nikko Securities.
"Will yields fall to 1.3, 1.25, or 1.2 percent? The question is not how low they can fall, but what will eventually cause them to reverse, and whether the move in the opposite direction will be rapid," he added.
News out of Europe on Tuesday raised familiar concerns. Spain paid the second-highest yield on short-term debt since the euro zone was created and European Union officials said Greece had little hope of meeting the terms required to secure its bailout.
On the domestic front, the Wall Street Journal said Federal Reserve officials were moving closer to stimulus steps, as the central bank considers new methods of sparking growth.
Economic data on Tuesday added to evidence more stimulus might be needed. The Richmond Fed's manufacturing index dropped to its lowest level since April 2009, and separate data showed U.S. manufacturing this month expanded at the slowest pace since late 2010.
Against this backdrop, the yield on five-year notes also hit a record low of 0.5378 percent, even with a five-year sale later in the session. The 5-year yield was last at 0.5410 percent, down from 0.552 percent late on Tuesday.
The Treasury will auction $35 billion in five-year notes on Wednesday and $29 billion in seven-year debt on Thursday. A sale of $35 billion of two-year notes on Tuesday garnered a record low yield.
The yield on 30-year bonds stood at 2.459 percent, also down from 2.472 percent in late U.S. trade on Tuesday when they fell as low as 2.4540 percent, also a record. (Reporting by Lisa Twaronite; Editing by Jacqueline Wong)