* 10-year bond yield ends up 2 bps at 8.66 pct     * All eyes on cbank policy review decision due Tuesday     * Dovish tone from cbank to lead to market rally-analysts      By Swati Bhat     MUMBAI, June 2 (Reuters) - Indian government bond yields edged higher on Monday, snapping a two-day fall, as caution prevailed ahead of the central bank's monetary policy review and investors awaited Governor Raghuram Rajan's statement on inflation.     The Reserve Bank of India's policy review on Tuesday will be the first since Narendra Modi became India's prime minister and Rajan will need to sell his focus on inflation to a new government determined to revive economic growth and create jobs.     The statement will thus be seen as a key signal to the new government, given all but three of the 52 economists polled by Reuters expect RBI to hold key policy rates steady.  
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       The RBI has raised the repo rate by 75 basis points since September.     "Indian government bonds will likely rally on a dovish policy tone and on any signal from the RBI that we are at the peak of policy-rate cycle," Standard Chartered Bank said in a note.     The benchmark 10-year bond yield  
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   closed up 2 basis points at 8.66 percent.      India's first term reverse repo auction to drain cash met with a poor response as market participants believed liquidity was not as flush as the central bank was anticipating.     The RBI allotted only 20.25 billion rupees ($342.70 million) at the 4-day term reverse repo auction, sharply below the minimum notified amount of 150 billion rupees, and set a cut-off rate of 8 percent.  
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       A pair of key economic indicators failed to have much of an impact ahead of the RBI review.     Data late on Friday showed India's economy posted a second straight year of sub-5 percent growth, while a business survey on Monday showed factory activity missed expectations although input prices rose at their slowest rate in over a year.  
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          In the overnight indexed swap market, the benchmark 5-year swap rate  
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   closed down 1 basis point at 8.08 percent while the 1-year  
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   rate edged 1 basis point higher at 8.39 percent.   (Editing by Anupama Dwivedi)  ((swati.bhat@thomsonreuters.com)(+91-22-61807353)(Reuters Messaging: swati.bhat.thomsonreuters.com@reuters.net))  Keywords: MARKETS INDIA BONDS/