Indian bond yields ease as supply concerns fade

MUMBAI, July 3 (Reuters) - Indian federal bond yields fell on Friday as the market was optimistic the government will not overshoot its borrowing limit by a huge margin and lower U.S. yields and oil prices further supported the sentiment.

* At 9:13 a.m., the yield on the most traded 6.07 percent bond maturing in 2014 IN060714G=CC was at 6.26 percent, below Thursday's closing of 6.32 percent. There were no deals so far in the benchmark 10-year bond IN060519AG=CC.

* The government has so far sold 1.62 trillion rupees of bonds of the 3.62 trillion rupees it had planned for 2009/10. The government is likely to raise its borrowing target to 3.95 trillion rupees in its budget on Monday, a Reuters poll showed. [ID:nBOM402323]

* U.S. Treasury bond prices climbed on Thursday as an unexpectedly sharp drop in June payrolls shook confidence in the prospects of economic stabilization, though supply concerns limited gains. [US/]

* Oil fell towards $66 a barrel on Friday as high jobless numbers across the U.S. and Europe revived concerns about the global economic outlook and its impact on energy demand. [O/R] (Reporting by Neha D'silva; Editing by Prem Udayabhanu)