Indian government bond yields ended little changed on Friday while they posted a weekly decline as their U.S. peers continued to fall on increased bets of a rate cut in September by the Federal Reserve.

India's benchmark 10-year yield ended at 6.9832%, following its previous close at 6.9872%. The bond yield ended 3 basis points lower this week, compared with a 4-bps rise in the previous week.

"There's been a consistent fall in U.S. yields due to a positive sentiment around rate cuts, which augured well for our bond yields and pushed the 10-year yield below 7%," said Yogesh Kalinge, vice president at A.K. Capital Services.

U.S. Treasury yields were lower this week after economic data showed a cooling of the labour market, retaining hopes that a rate cut from the Fed may be on the horizon.

The latest data after a softer-than-expected retail inflation print have also strengthened rate cut bets.

The 10-year U.S. yield was down 22 bps so far this week to 4.20%.

Market expectations for a rate cut of at least 25 basis points (bps) at the Fed's September meeting stood at 68.5%, according to the CME's FedWatch Tool, up slightly from the 64.7% in the prior session.

The futures market is pricing in 50 bps of rate cuts this year, according to the CME FedWatch tool, even though the Fed this week slashed its forecast to only one 25 bps cut in 2024.

Meanwhile, foreign banks bought Indian government bonds worth 80.38 billion rupees on Thursday, stepping up purchases after the U.S. inflation print and ahead of inclusion in JPMorgan's emerging market debt index.

"The benchmark yield will move towards 6.95% as foreign flows pick up further. The near-term yield movement trajectory should be downwards," Kalinge said.

Earlier in the day, New Delhi raised 340 billion rupees ($4.07 billion) through the sale of bonds. ($1 = 83.5240 Indian rupees)

(Reporting by Bhakti Tambe; Editing by Sohini Goswami)