MUMBAI, May 27 (Reuters) - The Indian rupee will gauge whether foreign inflows into Indian equities persist this week and, alongside government bond yields, will await the core U.S. personal consumption inflation print, the Federal Reserve's preferred inflation gauge.

The rupee closed at 83.0975 against the U.S. dollar on Friday after rising to a two-month high of 83.0350 during the session.

The currency ended the week higher by nearly 0.3%, notching its second consecutive weekly gain.

Inflows into Indian equities helped lift the rupee on Friday with the benchmark equity indices, BSE Sensex and Nifty 50 touching record highs.

The rupee is expected to see mild appreciation this week but the extent of it will depend on whether the Reserve Bank of India (RBI) steps in to buy dollars, said Sajal Gupta, executive director and head of forex and commodities at Nuvama Institutional.

Traders expect the rupee to hover between 83 and 83.30 this week.

The RBI may step in to "accumulate (dollars) once USD/INR declines towards 82.90," a foreign exchange trader at a private bank said.

Investors will also await the release of U.S. PCE inflation data on Friday, which will influence expectations of when the Fed may begin easing policy rates.

Meanwhile, the 10-year Indian government bond yield ended at 6.9988% on Friday, its fifth consecutive weekly decline.

Traders expect the benchmark bond yield to move in the 6.96%-7.05% range this week, with the major focus on liquidity-infusing steps from the government after the record surplus transfer by the RBI strengthened its cash position further.

"The major thing now to look out for would be what the government does after the central bank dividend," said Yogesh Kalinge, vice president at A.K. Capital Services.

"I expect improvement in fiscal positions, and that will lead to a gradual downward move in yields, maybe towards 6.95%."

Last week, the RBI's board approved the transfer of a record 2.11 trillion rupees as surplus to the government for fiscal 2024.

Traders will also keep an eye on foreign inflows as the deadline for the inclusion of government bonds in JPMorgan's index nears.

Allianz Global Investors, the European insurer's asset management unit, is planning to increase its exposure to government bonds in its 170 billion euro ($184.5 billion) fixed income portfolio, said Giulia Pellegrini, senior portfolio manager for EM fixed income and sustainable investing at AllianzGI. KEY EVENTS: ** U.S. May consumer confidence - May 28, Tuesday (7:30 p.m. IST) ** U.S. Jan-Mar GDP second estimate - May 30, Thursday (6:00 p.m. IST) ** U.S. initial weekly jobless claims week to May 20 - May 30, Thursday (6:00 p.m. IST) ** India April infrastructure output data - May 31, Friday ** India Jan-Mar growth data - May 31, Friday (5:30 p.m. IST)(Reuters poll - 6.7%) ** U.S. April personal consumption expenditure, core PCE index - May 31, Friday (6:00 p.m. IST) (Reporting by Dharamraj Dhutia and Jaspreet Kalra; Editing by Janane Venkatraman )