By Dharamraj Dhutia

MUMBAI, May 12 (Reuters) - Indian government bonds are likely to extend losses from the previous session in early deals on Tuesday, as oil prices remain elevated, with negotiations to end the war between the U.S. and Iran appearing fragile.

The benchmark 6.48% 2035 bond yield IN064835G=CC may move in a 7.02%-7.08% range, a private bank trader said. It had ended at 7.0317% on Monday, posting its biggest single-day rise in a month.

"There is no scope for any bullish bets at this stage, and traders will look to cut their positions further," the trader said.

Meanwhile, India's April inflation data is due on Tuesday, and traders expect it to reflect the impact of the war.

Annual inflation likely moved closer to the central bank's 4% target in April from the previous month's 3.40% as higher fuel costs from the U.S.-Iran war started feeding into prices, a Reuters poll of economists showed.

U.S. President Donald Trump said on Monday that the ceasefire with Iran was "on life support," pointing to disagreements over several demands.

Tehran also emphasised sovereignty over the Strait of Hormuz, which handles about a fifth of global oil and liquefied natural gas flows.

Disruptions linked to the near-closure of the strait since the start of the war on February 28, have prompted producers to curtail exports, with a Reuters survey on Monday showing OPEC oil output in April fell to its lowest level in over two decades.

For India, which imports nearly 90% of its crude, elevated prices could fuel inflation, pressure the rupee, widen the current-account deficit and complicate the government's fiscal calculations.

RATES

India's overnight index swap rates may inch higher as rising oil prices and escalating war risks could add to inflation worries.

The one-year INR1YMIBROIS=CC swap rate ended at 5.9% on Friday, while the two-year swap rate INR2YMIBROIS=CC settled at 6.13%. The most liquid five-year OIS rate INR5YMIBROIS=CC closed at 6.62%.