Oct 25 (Reuters) - Indian sugar futures rose for the first time in three sessions on Thursday on bargain-buying driven by hopes festivals will lift demand for the sweetener, though higher supplies for October and November weighed on sentiments.

* By 1028 GMT, the key November contract on the National Commodity and Derivatives Exchange was up 0.8 percent at 3,295 rupees ($61.24)per 100 kg.

* The contract hit a low of 3,270 rupees on Tuesday, the lowest level for the front-month contract since July 20.

* Sugar eased 14 rupees to 3,473 rupees per 100 kg at the Kolhapur spot market in the top producing Maharashtra state.

* "Retail demand is likely to improve significantly next week. That will offset supplies pressure," said a member of the Bombay Sugar Merchants Association, who declined to be named.

* Indians will celebrate Diwali, or the festival of lights, in November, when demand for sugar goes up as the consumption of sweets rise.

* The government has asked millers to sell 4 million tonnes of sugar in the open market during October and November, higher than the average monthly allocation of around 1.7 million tonnes.

* A rise in overseas prices also boosted sentiments, dealers said. March raw sugar futures in New York rose 0.71 percent to 19.82 cents a lb.

* India's sugar output in the 2012/13 year, which started on Oct. 1, is likely to fall to 23.5-24 million tonnes from 26 million tonnes a year earlier. ($1 = 53.8050 Indian rupees)