Government bonds advanced on Monday shrugging off a surge in crude oil prices triggered by escalating tensions in Middle East as optimism over the Reserve Bank of India‘s accommodative policy stance and measures to attract foreign capital supported market sentiment.The yield on the benchmark 6.48% 2035 government bond fell 2.4 basis points to 6.9532%, its lowest level in a month, according to Reuters.The gains extended Friday’s rally after the RBI left its key policy rate unchanged and unveiled a series of measures aimed at attracting foreign investment into government securities.Among the measures announced, the central bank offered cheaper currency swaps for overseas borrowings by public-sector companies and lenders, while providing full hedging cover for banks raising three- to five-year foreign currency deposits from non-resident Indians.“We believe the FNCR (B) scheme alone could potentially attract deposits worth 1% of GDP, which places the amount at a sizeable $40 billion,” analysts at Nomura said in a note, Reuters quoted.The rally also drew support from the Centre’s decision last week to remove taxes on interest income and capital gains arising from the sale of government securities by foreign investors.India’s benchmark 10-year bond yield declined for a third consecutive session, although gains were capped by rising US Treasury yields and higher crude oil prices.Brent crude climbed 4% to $96.34 a barrel during Asian trading after Israel struck Lebanon on Sunday, dampening hopes of a broader de-escalation in the region and a full reopening of shipping routes through the Strait of Hormuz.Meanwhile, the yield on the US 10-year Treasury note rose 2 basis points to 4.55% in Asian trade.India imports nearly 90% of its crude oil requirements, making the economy particularly sensitive to fluctuations in global energy prices.Overnight index swaps moved marginally higher amid caution over rising oil prices.The one-year swap rate edged up to 6.0475%, while the two-year rate rose to 6.24%. The five-year swap rate remained unchanged at 6.5375%.