Indian bond yields hover around 6-week lows

MUMBAI, Nov 24 - Indian federal bond yields stayed close to six-week lows on Tuesday as the absence of a bond auction and ample cash levels in the banking system improved market demand for debt.

* At 12:30 p.m., the yield on the 10-year benchmark bond <IN069019G=CC> was at 7.19 percent, after falling as low as 7.18 percent, matching the six-week low touched on Friday. It had ended at 7.22 percent on Monday.

* Dealers said the market was also eyeing results of the 67.16 billion rupees worth of state loans auction later in the day for cues.

* The absence of a federal debt sale this week is seen as bullish and traders said the market could absorb the remaining 640 billion rupees of government bonds scheduled to be sold over the rest of the fiscal year to March.

* The banking system was flush with funds as banks parked 1.08 trillion rupees in the central bank's reverse repo window on Tuesday.

* In interest rate futures on the National Stock Exchange , the December contract <N10Z9> implied a yield of 8 percent, above its previous close of 7.8478 percent. ((neha.dsilva@thomsonreuters.com; Tel: +91 22 6636 9033; Reuters Messaging: neha.dsilva.thomsonreuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))