UK gilt yields slide to six-week low on Korean nuclear fears

LONDON, Aug 9 (Reuters) - British government bond yields

slid to their lowest in six weeks in a thin market on Wednesday

as investors piled into safe assets such as gilts and German

Bunds as the United States and North Korea stepped up their

rhetoric.

U.S. President Donald Trump said late on Tuesday that North

Korea would face "fire and fury like the world has never seen",

and a spokesman for the Korean People's Army said on Wednesday

it was "carefully examining" plans for a missile attack on the

U.S. Pacific territory of Guam.

Ten-year gilt yields sank 6 basis points on the

day to touch their lowest since June 27 at 1.097 percent, while

five-year yields dropped 5 basis points to 0.48

percent, their lowest since June 22.

"There has definitely been an element of flight to safety.

But I think one has to put this all in a bit of perspective,"

said Marc Ostwald, a fixed income strategist at brokers ADM

Investor Services.

"A lot of the movements are exaggerated by thin summer

trading conditions. The fear factor because of Trump's rhetoric

is understandable. But we've been through these bouts with North

Korea before," he added.

Strong gains in prices of long-dated gilts suggested market

fears were less marked than if only shorter-dated bonds had

rallied, Ostwald said.

German and U.S. debt also performed strongly, with 10-year

Bund yields also dropping by 5 basis points.

Sept long gilt future 127.38 (+0.49)

Dec (Shanghai: 600875.SS - news) 2017 short sterling 99.63 (unch.)

March 2018 short sterling 99.57 (unch.)

10-year gilt yield 1.11 pct (-5 bps)

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(Reporting by David Milliken; Editing by Richard Balmforth)