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INDIA BONDS-Bond yields seen lower as Fed minutes signal slower rate hikes

By Bhakti Tambe

MUMBAI, Nov 24 (Reuters) - Indian government bond yields are expected to open lower on Thursday after minutes of the U.S. Federal Reserve's November meeting showed policymakers are looking to soon moderate the pace of interest rate increases.

India's benchmark 10-year bond yield is likely to hold in a 7.25%-7.29% band after ending at 7.2910% on Wednesday. The bias on yields is likely to remain downwards throughout the day, traders said.

The minutes from the Fed's meeting showed a "substantial majority" of policymakers agreed it would "likely soon be appropriate" to slow the pace of interest rate hikes.

Apart from the Fed minutes, the market will also take comfort from the overnight fall in oil prices and U.S. yields, with the 10-year yield in with a chance to break below the 7.25%-mark, a dealer with a private bank said.

The overall sentiment in the market will be positive, they added.

The Fed had raised its policy rates by 75 basis points for the fourth straight time in November. But slowing U.S. inflation had eased fears of more aggressive rate hikes going ahead and commentary from the U.S. central bank supported that sentiment.

Meanwhile, oil prices fell, extending losses from the previous session, as fears of supply disruption eased on news that the Group of Seven nations were considering a high price cap on Russian oil.

A greater-than-expected build-up in U.S. gasoline inventories added to downward pressure on prices.

KEY INDICATORS:

** Brent crude futures was 0.3% lower at $85.13 per barrel, after falling 3.3% in the previous session

** 10-year U.S. Treasury yield was at 3.7090% and the two-year note at 4.4830% (Reporting by Bhakti Tambe; Editing by Savio D'Souza)