(Updates at market open)

By Khushi Malhotra

MUMBAI, April 30 (Reuters) - Indian government bonds

tumbled on Thursday, putting the benchmark 10-year note on track

for its worst session in nearly a month, as surging oil prices

and a hawkish U.S. Federal Reserve pushed global yields higher.

The benchmark 6.48% 2035 bond yield was up 7

basis points to 7.0634% by 11:20 a.m. IST.

"Bonds were already struggling with oil issue, and Fed has

further made any recovery tough," trader with a private bank

said.

Brent crude rose to $125.60 a barrel, its highest since

March 2022 after Russia's invasion of Ukraine.

The U.S.-Iran conflict showed no signs of easing after

President Donald Trump spoke with oil companies about limiting

the impact of a possible months-long blockade of Iranian ports

aimed at forcing Tehran to reopen the Strait of Hormuz, which

carries about a fifth of global energy supplies.

India, which imports nearly 90% of its oil needs, is

especially vulnerable to a spike in crude prices. The Reserve

Bank of India has said a 10% rise in oil prices above $85 a

barrel could raise inflation by 50 basis points and cut growth

by 15 basis points.

In its April policy, the RBI said it expects GDP growth to

slow to 6.9% in 2026-27 from an estimated 7.6% in the year ended

March 31, 2026, while projecting average inflation at 4.6%,

assuming oil at $85.

The oil shock was compounded by rising developed-market

yields, which reduce the appeal of emerging-market debt.

U.S. Treasury yields extended gains in Asia after the

Federal Reserve's most divided rate decision since 1992, with

the 10-year yield touching a five-week high of 4.43%.

The rupee also fell to a fresh record low on Thursday, and

was last at 95.27 per dollar, as investors fretted over the

economic risks confronting India.

RATES

India's overnight index swap rates surged sharply as oil

jitters and rising US Treasury yields soured sentiment

domestically.

The one-year OIS rate was up 13.25 bps at

6.12%, while the two-year swap rate surged

12.75 bps to 6.36%. The liquid five-year OIS

rate jumped 10.5 bps to 6.7150%.