Bloomberg News

Gilts Decline on Speculation Europe Progressing With Debt Plan

October 17, 2011

Oct. 17 (Bloomberg) -- Gilts fell for a second day after Group of 20 finance ministers and central bankers endorsed parts of a plan to resolve the euro-area’s sovereign debt crisis, curbing demand for safer assets.

The pound approached a one-month high versus the dollar after an industry report showed London home sellers raised asking prices by the most in two years in October. G-20 officials set an Oct. 23 summit of European leaders as the deadline for a package of measures to be delivered. The Stoxx Europe 600 Index and the U.K.’s FTSE 100 both rose 1.3 percent.

The 10-year gilt yield climbed three basis points, or 0.03 percentage point, to 2.64 percent at 9:24 a.m. London time. The 3.75 percent security due September 2021 fell 0.285, or 2.85 pounds per 1,000-pound ($1,582) face amount, to 109.625. The two-year rate rose one basis point to 0.63 percent.

U.K. government debt has returned 10 percent this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies, surpassing the 5.9 percent gain for German bunds and 3.1 percent for French debt.

The pound gained 0.1 percent to $1.5838, after strengthening 1.7 percent last week. It reached $1.5853 on Oct. 14, the strongest since Sept. 15. Sterling was little changed at 87.80 pence per euro.

The U.K. currency has declined 1.2 percent in the past six months, according to Bloomberg Correlation-Weighted Indexes, which measure a basket of 10 developed-market currencies.

--Editors: Nicholas Reynolds, Matthew Brown

To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net


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