Indian bond yields inch up; $1.9 bln auction eyed

* Dealers eye federal bond auction results for further cues

* Liquidity, slow credit growth support demand, say traders (Updates to mid-morning)

MUMBAI, Nov 6 (Reuters) - Indian federal bond yields inched up on Friday as further state supply announcement and higher U.S. yields ahead of jobs data dampened sentiment.

The central bank said after market hours on Thursday, it would sell 41.06 billion rupees ($879.2 million) of state loans on Nov. 10.

The results of the federal government's 90 billion rupees bond auction later in the day would provide further cues, said traders.

At 11:27 a.m. (0557 GMT), the yield on the Indian 10-year benchmark bond IN069019G=CC was at 7.33 percent, above Thursday's closing of 7.29 percent.

Volumes were a moderate 20.70 billion rupees on the central bank's trading platform.

Longer-dated U.S. Treasuries slipped in Asia on Friday on caution before key U.S. jobs data later in the day and a record amount of bond supply next week. [US/].

"Credit offtake is low and with the huge amount of liquidity in the banking system, banks have no choice but buy bonds which would support prices," said Anoop Verma, an associate vice president at Development Credit Bank.

He expects the 10-year bond yield to trade in the range of 7.25-7.35 percent during the day.

Indian banks, which are flush with liquidity, parked 1.39 trillion rupees in the reverse repo window on Thursday.

Bank loan growth INLOAN=ECI was at 10.8 percent on the year as on Oct. 9, lower than the central bank's projection of 18 percent by March-end.

Dealers said the demand for debt was also supported by the central bank's move last week to raise the proportion of deposits banks need to hold in approved government securities by 100 basis points to 25 percent, which would take effect from Nov. 7.

The benchmark five-year interest-rate swap remained steady at 6.64/68 percent, higher than its previous closing of 6.61/65 percent. [IN-SWAPS]

In interest-rate futures on the National Stock Exchange (NSE), the December contract N10Z9 was implying an yield of 8.0142 percent, above its 7.9635 percent previous close.

The yield implied in the March contract N10H0 was 8.2901 percent, below its previous close of 8.3567 percent. ($1 = 46.7 Rupees) (Reporting by Neha D'silva; Editing by Malini Menon)