MUMBAI, July 5 (Reuters) - Indian government bond yields

are expected to be flat at the open on Friday, as market

participants await a fresh supply of debt as well as key U.S.

jobs data later in the day.

The benchmark 10-year yield is likely to move

in the 6.99%-7.03% range, following its previous close at

6.9994%, a trader with a primary dealership said.

"The market has struggled for cues through the week, and the

demand at the auction could provide some idea of investor

appetite as this would the first auction after we have got

clarity on foreign flows following the inclusion of Indian debt

on a global index," the trader said.

Markets will keep a close eye on demand as New Delhi aims to

raise 280 billion rupees ($3.35 billion) by selling bonds

through the weekly auction, including the liquid 15-year paper.

The auction comes after a tepid start to foreign inflows

following the inclusion of Indian debt in JPMorgan's ( JPM ) emerging

market debt index last week.

Meanwhile, the 10-year U.S. yield traded at around 4.35%

during Asian hours, while U.S. markets were shut on Thursday.

U.S. yields eased on Wednesday amid growing signs of

weakness in the manufacturing sector and jobs market, suggesting

that the world's largest economy was slowing down.

Investors will now closely track crucial June nonfarm

payrolls data, due after Indian market hours, which will give

more clarity on the extent and timing of U.S. rate cuts this

year.

While the Federal Reserve has lowered its forecast for rate

cuts to 25 basis points (bps) in 2024, investors continue to

expect 50 bps of cuts after recent soft U.S. economic data.

Markets will also eye inflation prints in India and the U.S.

next week as the next set of directional triggers.

KEY INDICATORS:

** Brent crude futures were 0.3% lower at $87.20 per

barrel, after rising 0.1% in previous session

** Ten-year U.S. Treasury yield at 4.3701%, two-year

yield at 4.7058%

** India to sell sovereign bonds worth 280 billion rupees

** RBI to set underwriting fees for 280 billion rupees of

sovereign bond auction

** RBI to conduct 3-day variable rate reverse repo for 1

trillion rupees

($1 = 83.4880 Indian rupees)