MUMBAI, April 23 (Reuters) - Indian government bond yields are expected to remain largely steady in early trading on Tuesday amid no major moves in global factors, while traders will focus on debt supply from states.

The benchmark 10-year yield is likely to trend in a 7.17%-7.21% range, following its previous close at 7.1890%, a trader with a primary dealership said.

"After the correction in bond yields yesterday, we may be in for a quiet couple of sessions, and with no change in fundamentals, sideways trading should be the theme for now," the trader said.

Indian states aim to raise 120 billion rupees ($1.44 billion) through sale of bonds later in the day, below schedule for the third consecutive week.

Yields and overnight index swap rates eased on Monday as oil prices declined, after rising at the start of the session, leading to some short covering in debt and receiving interest in swaps, which aided sentiment.

Oil prices fell on Monday as traders saw little near-term risk that the Middle East conflict would impact supply. The benchmark Brent crude contract, that had crossed $92 per barrel earlier this month, was trading around $87 per barrel in Asia hours.

Oil prices affect domestic retail inflation as India is one of the largest importers of the commodity, and elevated prices could make the Reserve Bank of India's inflation target more difficult to achieve.

Success in India's disinflation process should not distract the RBI's monetary policy committee from the inflation trajectory's vulnerability to frequent supply-side shocks, Governor Shaktikanta Das said in the minutes of the April meeting.

Meanwhile, U.S. Treasury yields were steady on Monday, with the 10-year yield near the 4.60% mark, amid recent remarks from Federal Reserve officials that they do not feel urgency to cut rates given the strength in the economy.

Investors are now pricing the possibility of around 40 basis points (bps) of rate cuts by the Federal Reserve by end of this year, compared to over 150 bps expected at the start of 2024, according to CME's FedWatch Tool.

KEY INDICATORS:

** Brent crude futures 0.3% higher at $87.25 per barrel, after easing 0.3% in previous session

** Ten-year U.S. Treasury yield at 4.6167%, two-year yield at 4.9735%

** Five states to raise 120 billion rupees via sale of bonds ($1 = 83.3560 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Varun H K)