Indian government bonds were hemmed in to a narrow range on Thursday, after a sharp selloff in the previous session, when surging oil prices and higher U.S. Treasury yields pressured local debt on signs that a U.S.-Iran interim peace deal is unraveling. The U.S. military said on Wednesday it launched fresh strikes ‌on Iran ⁠to keep ⁠the Strait of Hormuz open to shipping, prompting Iranian attacks on Kuwait and Bahrain, both of which host U.S. bases, denting hopes of a quick end to the war. Benchmark Brent crude surged more than 5% on Wednesday and added 1.15% in Asian trade to $78.92 a barrel.INDIA BONDS-India bonds pause after slump as oil, Treasury risks lingerIndian government bonds traded narrowly on Thursday after a sharp selloff. Surging oil prices and higher U.S. Treasury yields pressured local debt markets. The U.S. military launched fresh strikes on Iran, impacting peace hopes. Minutes from the U.S. Federal Reserve also reflected inflation concerns. Foreign participation continued to support Indian government bonds. The 10-year U.S. Treasury yield rose about 4 bps in the previous session, pushing higher to 4.5792% ⁠in Asian trade. The ‌minutes of the U.S. Federal Reserve's latest policy meeting also reflected concern among policymakers about inflation, adding to selling pressure as ⁠market participants weighed the odds of a rate hike this year. The Indian benchmark 6.94% 2036 bond yield was little changed at 6.7670% by 10:15 a.m. IST. Bond yields move inversely to prices. The yield logged its biggest one-day rise in three months on Wednesday, climbing 7 bps to 6.7636%. "With supportive structural demand and ongoing foreign participation still supportive, the spike is likely transient," analysts at DBS Bank wrote in a note. DBS ‌said the upmove made India's 10-year bond attractive, while HSBC favoured 15-year notes. Foreign demand continued to anchor the market. Overseas investors have net bought 365 billion rupees, ⁠or $3.82 billion, of Indian government bonds under the Fully Accessible Route since the start of June, drawn by rising expectations of India's debt being included in Bloomberg's Global Aggregate Index.RATES India's overnight index swap rates edged higher, adding to large moves in the previous session tracking volatility across markets ignited by the fraying U.S.-Iran peace deal. The one-year rate was at 5.84%, while the two-year rate was at 5.99%. The most liquid five-year rate rose marginally to 6.23%. ($1 = 95.5500 Indian rupees)