MUMBAI, Sept 17 (Reuters) - Indian government bond

yields posted their first rise in five sessions on Tuesday, as

traders booked profits a day before the U.S. Federal Reserve's

monetary policy decision.

The benchmark 10-year yield ended at 6.7808%,

compared with its previous close of 6.7613%. Earlier in the day

it had dropped to 6.7517%, the lowest level since Feb. 28, 2022.

Indian debt markets are closed on Wednesday for a public

holiday, while the Fed decision is due late in the evening.

"The market is currently pricing in 50 bps cut by the Fed.

If this does not materialise, we may see some sell-off in bond

markets in the near term," said Aneesh Srivastava, executive

director and chief investment officer at Star Health Insurance.

The 10-year U.S. yield remained close to the

3.60% mark, as the possibility of an outsized cut continued to

rise. The probability of a 50-bp cut has jumped to 67% from just

14% last week. Markets are expecting aggregate cuts of 119 bps

in 2024.

Investors will also focus on updated economic projections,

the dot plot and commentary from Fed Chair Jerome Powell at a

press conference, which will likely provide clarity on the

interest rate trajectory.

A larger rate cut from the Fed could encourage the Reserve

Bank of India to start policy easing sooner than anticipated,

traders said. As of now, the majority do not expect any rate

action at least till December.

Bond yields and overnight index swaps have already priced in

50 bps cut and dovish commentary from the Fed, and may reverse

if the decision goes the other way, traders said.

Debt supply on Friday is also on investors' radar as New

Delhi will raise 310 billion rupees ($3.70 billion), which

includes 200 billion rupees of the benchmark paper.

($1 = 83.7310 Indian rupees)