Indian 10-year bond yield up sharply on inflation

(Updates to early trade)

MUMBAI, June 30 (Reuters) - Indian federal bond yields jumped on Monday on high inflation and worries fresh supplies of bonds would further squeeze tight cash conditions.

Traders said high global oil prices CLc1, which were trading just below $142 a barrel, triggered expectation state-set fuel prices may be raised again.

By noon (0630 GMT), the 10-year benchmark bond yield IN082418G=CC was at 8.78 percent, 20 basis points above Friday's close. It had hit a near seven-year high of 8.86 percent last Wednesday.

"Oil and inflation are continuing worries and investors are not clear where inflation will peak," a dealer with a mutual fund said.

Annual wholesale price inflation rate rose to 11.42 percent in mid-June, its highest in more than 13 years.

Finance Minister Palaniappan Chidambaram told a news channel last week that inflation would stay in double digits for some weeks and may start moderating after three months.

After market hours on Friday, the central bank said it would sell 100 billion rupees ($2.3 billion) of bonds on July 4. The sale would include 60 billion rupees of 8.24 percent 2018 bonds and 40 billion rupees of 8.28 percent 2032 bonds.

Overnight cash INROND= was quoted at 8.70/8.80 percent, above the repo rate of 8.50 percent, reflecting tight cash conditions. ($1=42.9 rupees) (Reporting by V. Ramakrishnan; Editing by Ranjit Gangadharan)