MUMBAI, Feb 21 (Reuters) - Indian government bond yields trended down on Wednesday, led by recent foreign buying, while no fresh supply for the rest of the financial year also aided sentiment.

The benchmark 10-year yield was at 7.0406%, lowest since Feb. 2, as of 10:00 a.m. IST, following its previous close of 7.0610%.

"The renewed push from foreign investors for longer-duration papers has given a fresh lease of life to markets which were heading into a thin-range trading zone," a trader with a private bank said.

Longer-duration yields declined towards the end of trade on Tuesday amid a pick-up in purchases from foreign investors who have been favouring such bonds of late, traders said.

Foreign investors have been on a buying spree, ahead of the scheduled inclusion of Indian government bonds in JPMorgan's emerging market debt index from June.

They have bought around 350 billion rupees ($4.22 billion) of bonds on a net basis so far in 2024 after purchases in 2023 jumped to a six-year high, Clearing Corp of India data showed.

Meanwhile, minutes of the Federal Reserve's latest monetary policy meeting are due later in the day, while minutes of the Reserve Bank of India's February monetary policy meeting are scheduled to be out on Thursday.

The RBI had left interest rates and its policy stance unchanged, while reiterating its commitment to meeting the 4% inflation target on a sustainable basis.

Inflation expectations in India may stabilise and edge down going ahead, but renewed pressures from cereals and proteins cannot be ruled out, the central bank said in its February bulletin published on Tuesday.

The country's retail inflation eased to a three-month low of 5.10% in January, from 5.69% in December.

The 10-year U.S. yield was around 4.30%, as hopes of imminent rate cuts ebb. The odds of a cut in May are down to 37%. ($1 = 82.8800 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Sohini Goswami)