Weekly food and fuel price data will also be watched for cues on broader inflation.

10-year yield was steady at its Wednesday's close of 8.34 percent, and is expected to move in a narrow 8.33-8.36 percent band ahead of the borrowing schedule announcement.

Forex and debt markets will be closed on Friday for half-yearly closing of banks' accounts.

Total volumes on the central bank's electronic trading platform were a low 14.75 billion rupees ($301.6 million) compared with 35 billion to 45 billion rupees traded in the first two hours.

"The auction calendar will be watched for direction during the day," said Debendra Dash, a fixed income dealer with Development Credit Bank.

New Delhi, which set a gross borrowing target of 4.17 trillion rupees for 2011/12, has completed borrowing 2.5 trillion between April and September.

However, the government has had to hold back on asset sales in the current global turmoil, leading market participants to expect it to overshoot its borrowing target as it is unlikely to meet its disinvestment targets.

The government borrowing schedule for the second half of this fiscal year is expected to be announced in the afternoon after the meeting due to start at 0830 GMT, while inflation data is due around noon (0630 GMT).

"Food and fuel inflation front, it doesn't seem like there would be anything dramatic. Inflation is expected to remain high for the next two to three months, so that's on the cards," Dash added.

The benchmark five-year swap rate was up 4 basis points at 6.98 percent, while the one-year rate was at 7.88 percent from 7.86 percent on Wednesday.

US Treasury debt prices fell on Wednesday as less gloomy US data and hopes for bold steps to combat Europe's debt crisis kept a lid on demand, though an afternoon stocks slide tempered losses.

In Asian trade, the 10-year US benchmark bond yield was at 1.99 percent, down 2 basis point from late New York trade on Wednesday when it had dropped 6 basis points.

Copyright Reuters, 2011