Indian bond yields up on profit taking, RBI talk

By Boby Michael

MUMBAI (Reuters) - Indian federal bond yields snapped a two-day losing streak on Friday and ended higher on profit taking ahead of the weekend, also supported by slightly hawkish words from the Reserve Bank of India (RBI) governor.

The yield on the 10-year benchmark bond ended at 7.19 percent, two basis point above Thursday's close.

Volumes were a high 126.25 billion rupees ($2.7 billion) at the central bank's reporting platform.

It fell as low as 7.14 percent in early deals, its lowest since Sept. 29, as risk aversion dominated market sentiment after Dubai's debt problems revived concerns about the health of the global financial system.

RBI governor said on Friday that there was no benign policy option and that inflationary pressures were building up.

"Investors saw better opportunity to book their profits when the yield fell below 7.15 percent," said M.T. Premanand Kamath, treasury head at state-run Corporation Bank.

"They also wanted to stay light ahead of the weekend and an expected auction announcement."

After the market closing, the government announced the sale of 100-billion rupees federal bonds, to be auctioned on Dec. 4. It will also sell 55 billion rupees of treasury bills next Wednesday.