India bond yields ease on stx falls, finmin comments

* Cbank to auction $3.8 bln of debt this week

* India to continue fiscal stimulus, says finmin

* Dealers eye U.S. Fed rate decision on Wednesday

By Boby Michael

MUMBAI, Nov 3 (Reuters) - Indian federal bond yields eased on Tuesday as domestic shares fell for a sixth straight session and comments by finance minister raised investor risk averseness that led to sovereign bond buying, traders said.

Yield on the 10-year benchmark bond yield IN069019G=CC ended at 7.22 percent, sharply below 7.30 percent at close on Friday. The market was closed on Monday for a local holiday.

"The slide in equities, in fact, helped maintain the bullishness for bonds and finance minister's comments underpinnned the sentiment," said Roy Paul, treasury head at Federal Bank.

India's central bank will auction 90 billion rupees of treasury bills on Wednesday and three bonds totalling 90 billion rupees through a price-based auction on Friday.

Traders said Wednesday's auction does not pose any supply concern given a surplus liquidity of over 1 trillion rupees in the system.

However, they expect the 10-year yield to find support near 7.15 percent.

Indian shares dropped 3.1 percent on Tuesday to its lowest close in two months, pulled down by a sell-off in top Indian conglomerate Reliance Industries (RELI.BO) and weak global markets. [ID:nBOM486209]

Finance Minister Pranab Mukherjee said on Tuesday that India has to continue with its fiscal stimulus and non-farm credit growth remained an area of concern. [ID:nBOM516605]

Traders also said they would be watching the U.S. Federal Reserve's two-day monetary policy meeting that ends on Wednesday and India's September industrial output data due next week.

The benchmark five-year interest rate swap ended at 6.66/70 percent, down from Friday's close of 6.76/80. [IN-SWAPS]

In interest rate futures on the National Stock Exchange (NSE), the December contract N10Z9 ended with an implied yield of 7.9961 percent, above its previous close of 7.9516 percent.

The yield implied in the March contract N10H0 closed at 8.2818 percent, from its previous close of 8.4077 percent. ($1=47.4 Indian rupees) (Reporting by Boby Michael; Editing by Malini Menon)