INDIA BONDS-India bond yields seen steady as traders eye debt supply

MUMBAI, April 19 (Reuters) - Indian government bond yields are expected to stay largely unchanged in early trading on Friday, as market participants await a fresh supply of debt, while U.S. yields and oil prices continue to remain elevated.

The yield on the benchmark 10-year bond is likely to trend in a 7.16%-7.21% range following its previous close at 7.1905%, a trader with a primary dealership said.

"There is news of some fresh addition in geopolitical tensions in the Middle East, and that should keep investors nervous, but the benchmark yield should hold 7.20%-7.21% levels for now, as there is no fresh high for oil and Treasuries," the trader added.

New Delhi aims to raise 240 billion rupees ($2.87 billion) through the sale of bonds, which includes a new 40-year security.

Oil prices jumped on Friday in reaction to reports that Israeli missiles had struck a site in Iran, sparking concerns that Middle East oil supply could be disrupted.

The benchmark Brent crude contract climbed towards $90 per barrel.

Higher commodity prices impact India's retail inflation and may make achieving the Reserve Bank of India's 4% target more difficult, delaying monetary policy easing.

Meanwhile, U.S. yields came off their recent highs, as demand for safe-haven assets rose amid escalating Middle East tensions, but the 10-year yield continues to remain comfortably above the 4.50% mark.

Investors have pared down expectations over the timing and quantum of U.S. rate cuts in 2024 and futures are now pricing the possibility of less than 50 basis points (bps) of cuts by the end of this year, sharply lower than over 150 bps expected at the start of the year, according to CME's FedWatch Tool. KEY INDICATORS: ** Brent crude futures 4.1% higher at $90.65 per barrel, after easing 0.2% in the previous session ** Ten-year U.S. Treasury yield at 4.5098%, two-year yield at 4.8856% ** India to sell sovereign bonds worth 240 billion rupees ** RBI to set underwriting fees for 240 billion rupees sovereign bond auction ** RBI to conduct 14-day variable rate repo for 750 billion rupees ($1 = 83.6180 Indian rupees) (Reporting by Dharamraj Dhutia Editing by Eileen Soreng)