Five-year gilt yields hit one-month high after U.S. jobs data

By David Milliken

LONDON, Feb 6 (Reuters) - British government bond prices fell sharply after data showed that the U.S. economy created many more jobs than expected, extending the week's heavy losses and taking five-year gilt yields to their highest in more than a month.

The robust U.S. payrolls figures -- which included sizeable upward revisions to previous months' data -- go some way to ease concerns about the health of the global economy, which took 10-year gilt yields to a record low last week.

March gilt futures turned tail and shed 70 ticks on the data, while five-year gilt yields peaked at 1.103 percent at 1336 GMT, more than 5 basis points up on the day and their highest level since Jan. 5.

"The job market data leave the door wide open for a first hike in (U.S.) interest rates in the summer," said Chris Williamson, chief economist at financial data provider Markit (NasdaqGS: MRKT - news) .

At the end of last week, financial markets had not priced in a first interest rate rise by the Bank of England until around September 2016, but they have been bringing expectations forward this week as British purchasing managers' data came in better than expected.

Next (Other OTC: NXGPF - news) week the BoE (Shenzhen: 200725.SZ - news) publishes a quarterly forecast update, and many economists -- who were already sceptical of such late market pricing for a BoE move -- expect it to revise up growth forecasts and hint at an earlier rate move.

Ten-year gilt yields peaked 5 basis points up on the day at 1.60 percent, their highest level since Jan. 12, while June 2016 short sterling interest rate futures tumbled 6 ticks as markets priced in higher British interest rates.

A week earlier, the 10-year yield hit a record low of 1.337 percent on the back of tumbling oil prices and fears of a debt default by Greece's newly elected leftwing government.

These pressures have eased over the past week, and 10-year yields are now 26 basis points higher, putting them on track for their biggest increase in a single week since June 2013 according to Reuters data.

March long gilt future 121.36 (-0.40)

June 2015 short sterling 99.37 (unch)

Dec (Shanghai: 600875.SS - news) 2015 short sterling 99.19 (-0.03)

10-year yield 1.59 pct (+5 bps)

-------------------KEY MARKET DATA--------------------------- Long Gilt futures Gilt benchmark chain Short Stg futures Cash market quotes Deposit rates Sterling cross rates UK debt speedguide -------------------KEY MARKET REPORTS-------------------------- Gilts Sterling Euro Debt Dollar U.S. Treasuries Debt reports --------------------GILT STRIPS DATA ------------------------- Gilt strips data All gilt strips Gilt strips IO Gilt strips PO (Editing by Toby Chopra)