Bloomberg News

Gilts Gain as Investors Seek Safety Amid Euro-Crisis Uncertainty

October 24, 2011

Oct. 24 (Bloomberg) -- U.K. government bonds rose as investors sought the safest assets amid uncertainty about progress on a revamped strategy to resolve Europe’s debt crisis.

Gilts rallied after regional leaders meeting in Brussels yesterday ruled out tapping the European Central Bank’s balance sheet to boost the size of the bailout fund. The complete rescue blueprint won’t be released until another European summit is held in two days time.

The 10-year gilt yield fell two basis points, or 0.02 percentage point, to 2.51 percent at 8:54 a.m. London time. The 3.75 percent security due September 2021 rose 0.175, or 1.75 pounds per 1,000-pound face amount, to 111.765. Two-year yields were little changed at 0.58 percent.

U.K. government debt has returned 11.2 percent this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies, surpassing the 6.6 percent return for German bunds and 7.7 percent increase for U.S. Treasuries.

Sterling was little changed against the 17-nation euro at 87.08 pence. It was unchanged at $1.5969.

The pound has weakened 1.1 percent in the past six months, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies.

--Editors: Nicholas Reynolds, Mark McCord

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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