* New central bank chief says inflation is immediate priority
* Yields rise on view tighter policy bias will remain
* Government to auction 80 bln rupees of bonds on Sept. 12
(Updates to close)
By Anurag Joshi
MUMBAI, Sept 5 (Reuters) - Indian federal bond yields rose on
Friday as comments from the new central bank governor pointed to
a continued tightening bias to combat double-digit inflation, and
on expectations fresh bond supplies would lower demand for debt.
The 10-year benchmark bond <IN082418G=CC> ended at 8.49
percent, off an early peak of 8.53 percent, but still two basis
points higher than Thursday's close of 8.47 percent. Volume was a
high 76 billion rupees ($1.7 billion).
"The immediate priority for me as the Governor of the Reserve
Bank of India will be to manage inflation and anchor inflationary
expectations," D. Subbarao told reporters just after taking
charge at the central bank on Friday.
"From the statements, it appears a status quo in policy," a
trader with a foreign bank said.
Annual inflation is running above 12 percent. The central
bank has raised its key lending rate by 125 basis points to 9
percent since the start of June to contain price pressures.
It has also tightened banks' reserve requirement by 150 basis
points this year to drain inflation-fuelling cash from the
banking system.
Traders had also awaited news of a fresh bond auction. After
market hours, the government said it would sell 50 billion rupees
of 2018 bonds and 30 billion rupees of 2032 bonds on Sept. 12.
($1 = 44.6 Indian rupees)
(Editing by John Mair)
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Keywords: MARKETS INDIA MONEY/