By Anoop Agrawal Aug. 7 (Bloomberg) -- India’s 10-year bonds fell on speculation some investors pared their holdings before a government debt auction today. Benchmark notes headed for a third weekly loss, pushing yields to their highest since the notes were issued on July 13, on concern record supply will prompt bidders to demand higher yields. India plans to sell 120 billion rupees ($2.5 billion) of debt each week until Sept. 4 as it funds a budget deficit that is set to reach the highest in 16 years. A two-day strike by bank workers seeking higher wages reduced trading volumes. “The absence of participation by most investors is pushing yields higher and will also have a bearing on the auction,” said Devendra Das a fixed-income trader at Development Credit Bank Ltd. in Mumbai. The yield on the 6.9 percent note due July 2019 climbed four basis points to 7.12 percent as of 2:40 p.m. in Mumbai, according to the central bank’s trading system. The price fell 0.25, or 25 paise per 100-rupee face amount, to 98.45. The yield has risen 12 basis points, or 0.12 percentage point, this week. The government has offered to sell today 40 billion rupees of 6.49 percent bonds due 2015, 60 billion rupees of 6.9 percent notes maturing in 2019 and 20 billion rupees of 7.4 percent securities due 2035. The bankers’ strike won’t force the government to cancel the auction as lenders have assured a smooth sale, a finance ministry official who asked not to be identified, said in New Delhi today. Strike, Talks More than 900,000 employees of state-run, private sector and foreign banks are holding protests demanding salary increases and pension benefits. The strike, which began yesterday, reduced trading in bond and currency markets and disrupted services for some customers. Indian banks and trade union leaders are in talks to resolve disputes that led to a two-day strike by bank employees in the nation, Finance Minister Pranab Mukherjee said in parliament today. The government is selling more bonds in the April-September period because it wants to ensure its market borrowing doesn’t hurt companies when demand for loans rise in the second half of the fiscal year, Junior Finance Minister Namo Narain Meena told lawmakers today. The government plans to borrow 2.99 trillion rupees in the first half out of the budgeted 4.51 trillion rupees for the whole year. To contact the reporter on this story: Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net.

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