By Dharamraj Lalit Dhutia

MUMBAI, Sept 20 (Reuters) - Indian government bond yields were little changed on Tuesday, as market participants awaited the U.S. Federal Reserve's policy decision this week for cues on domestic rates outlook.

The benchmark Indian 10-year government bond yield was at 7.2740% as of 0440 GMT, after closing at 7.2769% on Monday. In early trades on Tuesday, the yield had touched 7.2971%, highest since Aug. 25.

The yield has risen 17 basis points in the last four sessions.

"There is no major bullish factor that can pacify the bearish sentiment prevailing currently," trader with a private bank said. "We expect volumes to remain shallow today and tomorrow."

Sentiment was cautious, as bonds tracked moves in U.S. Treasuries.

The benchmark 10-year U.S. Treasury yield had risen to its highest level since 2011 on Monday, as investors adjusted for the prospect that the Federal Reserve will hike rates higher and for longer than previously expected.

The two-year yields jumped to their highest level since November 2007. The two-year yield typically reflects interest rate expectations.

The Fed policy decision is due on Wednesday, with markets pricing in a 19% probability of a 100 bps hike.

Several banks and brokerages expect the RBI to hike policy rates by 50 bps on Sept. 30, to control stubbornly high inflation that has remained above the central bank's upper tolerance band for eight straight months.

The central bank has raised interest rates by a total of 140 basis points during May-August.

Intraday, Indian states are scheduled to sell bonds worth 114 billion Indian rupees ($1.43 billion). ($1 = 79.6690 Indian rupees) (Reporting by Dharamraj Lalit Dhutia; Editing by Neha Arora)