Indian bond yields rise ahead of supplies

* Auctions for $3.5 billion keep traders wary

* Cut in banks' cash reserve requirement ahead (Updates to late morning)

MUMBAI, Oct 8 (Reuters) - Indian federal bond yields rose on Wednesday as investors braced for auctions totaling $3.5 billion this week that reduce availability of cash in the banking system.

At 11:15 a.m. (0545 GMT), the benchmark 10-year bond yield IN082418G=CC was at 8.12 percent, one basis point above Tuesday's close.

A 50 basis point cut in the cash reserve ratio (CRR), the proportion of deposits that banks must keep with the central bank, this weekend will release 200 billion rupees ($4.1 billion) into the banking system but dealers said payment towards bond and bill auctions would leave little surplus cash.

The surprise cut was announced on Monday with effect from Oct. 11.

"The cut in CRR was a positive but the auctions are weighing on sentiment," a dealer with a state-run bank said.

The central bank is auctioning 70 billion rupees of treasury bills on Wednesday, with 100 billion rupees of federal bonds to follow on Friday.

Oil prices retreated below $90 a barrel as concerns the global financial crisis will crimp demand for fuels overshadowed signs that producer group OPEC was considering a supply cut. [O/R]

Weekly inflation data for late September will be released on Friday because of a holiday on Thursday. Annual inflation has eased below 12 percent after hitting 12.6 percent in early August, its highest since data under the current series became available in April 1995. ($1=48.5 Indian rupees) (Reporting by V. Ramakrishnan; Editing by Ranjit Gangadharan)