UK 10-year yields dip below 1 pct as gilts catch up with Bunds

By Andy Bruce

LONDON, May 30 (Reuters) - British 10-year government bond

yields briefly dipped below 1 percent for the first time since

October on Tuesday, as gilts caught up with moves in German

Bunds after a public holiday in Britain.

The 10-year gilt yield fell to 0.99 percent

shortly after the market opened, its lowest level since Oct (Shenzhen: 000069.SZ - news) . 13.

As of 0835 GMT it stood at 1.01 percent, a shade lower than

their level late on Friday.

The five-year gilt yield dipped to its lowest

level since February at 0.442 percent.

While sterling has fallen sharply since opinion polls

started to raise doubts about Prime Minister Theresa May's

ability to deliver a large majority in next week's election,

there has been little impact on gilts, Societe Generale (Swiss: 519928.SW - news) fixed

income strategist Jason Simpson said.

"Bunds were trading on Monday, the 10-year (Bund yield) fell

4 basis points. Gilts are benefiting from that a bit," Simpson

said, adding there was little economic news out of Britain on

Tuesday.

Simpson said the 1 percent mark had significance because the

last time gilts were trading at that level regularly, the Bank

of England had recently cut interest rates and was talking of

more stimulus.

But he doubted gilt yields had much further to fall now.

"Unless we feel that we are in that sort of environment

again, to my mind (yields) will struggle to sustain any break

lower," he said.

Markit (NasdaqGS: MRKT - news) /CIPS business surveys due later this week will shed

further light on whether the sharp economic slowdown in the

first quarter has persisted into the current period.

The yield spread between 10-year British and German

government bonds stood at 70.8 basis points, up more

than 2 basis points since last Friday.

Sept long gilt future 128.17 (+0.04)

Dec (Shanghai: 600875.SS - news) 2017 short sterling 99.64 (unch.)

June 2018 short sterling 99.57 (unch.

10-year gilt yield 1.01 pct (-0.5 bps)

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Long Gilt futures Gilt benchmark chain

Short Stg futures Cash market quotes

Deposit rates Sterling cross rates

UK debt speedguide

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Euro Debt Dollar

U.S. Treasuries Debt reports

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Gilt strips data All gilt strips

Gilt strips IO Gilt strips PO

(Editing by Andrew Heavens)