UK 30-year gilt yields slide to 8-week low on supply worries

By David Milliken

LONDON, March 14 (Reuters) - British 30-year gilt yields

fell to their lowest level in eight weeks on

Wednesday, extending a rally that started after the UK Debt

Management Office unveiled scaled-back issuance plans on

Tuesday.

British government bond sales during the coming financial

year are set to be the lowest since the financial crisis after

finance minister Philip Hammond announced the lowest net public

borrowing needs since 2002 on Tuesday.

The planned mix of issuance has also tilted slightly towards

short and medium-dated gilts.

DMO chief executive Robert Stheeman told Reuters on Tuesday

that Britain is looking to reduce the share of inflation-linked

gilts - which tend to be long duration - to lower potential

long-run risks to taxpayers.

Thirty-year conventional gilt yields sank to their lowest

level since Jan. 18 at 1531 GMT, down seven basis points on the

day at 1.822 percent.

Ten-year yields were as much as 6 basis points

lower at 1.431 percent, the lowest since March 2.

"It's partly to do with the fact that there's less duration

going on in the market, as there will only be two long and two

linker syndications this year, compared with five last year,"

RBC fixed income strategist Vatsala Datta said.

Trading flows were also amplifying Wednesday's move, she

added.

Ten-year gilts outperformed German Bunds , with

the yield spread tightening by as much as 2 basis points to a

two-day low of 84.3 basis points.

Short sterling interest rate futures for late 2018

onwards were slightly higher - implying a slower pace of Bank of

England tightening - although markets still price in a roughly

70 percent chance that the BoE (Shenzhen: 000725.SZ - news) will raise rates at May's meeting

.

June long gilt future 121.95 (+0.57)

June 2018 short sterling 99.19 (+0.01)

Dec (Shanghai: 600875.SS - news) 2018 short sterling 99.00 (+0.03)

10-year gilt yield 1.43 (-5.6 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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(Reporting by David Milliken; Editing by Toby Chopra)