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UPDATE 2-U.S. short-term borrowing costs rise to highest since 2008

* This week's debt sales to raise $48 bln in new cash for Treasury

* Analysts cautious about five-year, seven-year note auctions (Adds quote, details)

NEW YORK, Feb 20 (Reuters) - Some of the U.S. government's short-term borrowing costs rose to their highest in more than nine years on Tuesday as it raised $179 billion in the Treasury securities market to fund spending and make debt payments.

Tuesday's auctions made up more than half of the $258 billion in Treasury debt supply scheduled for sale this week, which is projected to raise nearly $48 billion in new cash for the government.

Concerns about an expected surge in federal borrowing have escalated after a major tax overhaul late last year which is estimated to add up $1.5 trillion to government indebtedness. Adding to these concerns was a two-year budget deal reached this month which would increase spending on military and entitlement programs by $300 billion.

Tuesday's short-dated government supply had a mixed reception among investors and dealers.

Analysts and traders said they were more concerned about demand for the $35 billion five-year note sale on Wednesday and $29 billion seven-year auction on Thursday .

These medium-term Treasuries were hard hit last week by stronger-than-forecast inflation data that stoked bets the Federal Reserve may speed up its interest rate hikes.

"Demand could be spotty here because the two-year (auction) didn't do particularly well," said Mary Anne Hurley, vice president of fixed income at D.A. Davidson in Seattle.

The Treasury will also auction $15 billion in two-year floating-rate notes on Wednesday.

On Tuesday, the Treasury sold $51 billion of three-month bills at an interest rate of 1.63 percent and $45 billion of six-month bills at an interest rate of 1.82 percent. These were record-high amounts offered in an auction for both maturities, and they sold at the highest yields since September 2008.

It also sold $55 billion in one-month bills at an interest rate of 1.380 percent, and $28 billion in two-year fixed-rate debt at a yield of 2.255 percent, the highest since August 2008.

(Reporting by Richard Leong; Editing by James Dalgleish and Chizu Nomiyama)