NEW YORK, Sept 17 (Reuters) - The yield on 3-month U.S. Treasury bills US3MT=RR fell to 0.02 percent early afternoon New York trade on Wednesday amid investors' panicked scramble into the safe haven of ultra short-dated government securities, traders said.

The 3-month U.S. Treasury bill yield “last traded at 0.02 percent as an actual trade and may have traded negative earlier today,” said Sean Murphy, Treasuries trader at RBC Capital Markets in New York, shortly after 12:30 p.m. EDT (1630 GMT).

The last time the 3-month U.S. T-bill yield was at or below zero was in January 1940, said Bryan Taylor, chief economist with Global Financial Data in Los Angeles.

Murphy cited “a flight to quality into the Treasury bill market.” “People are just panicking and they just want their principal,” he said.

Andrew Brenner, analyst at MF Global Inc, said the 3-month bill traded at 0.02 percent.

“Probably there’s disappointment in the Fed’s decision (to hold interest rates unchanged) yesterday and what’s transpiring is that banks are just pulling back and not lending and not being able to get the funding they need,” Murphy said.