UK government bonds recovered from earlier selling on strong domestic data to finish little changed on the session.
Gilts got off to a weak start on data from the Office for National Statistics showing a 0.4 per cent rise in retail sales volumes in December, taking the annual increase to 4 per cent, against the 3.7 per cent predicted by analysts. With retail sales having increased in November and December for only the third time in 20 years, economists predicted that a UK rate cut may be further away than previously thought. Gilts were also pressured by an above-forecast rise in the University of Michigan ‘s consumer sentiment index for December.
The March gilt future closed 2p higher at £115.03. However, short and long-dated maturities fell on the day, with Treasury 4¾ per cent 2010 off 7p at £102.18 and Treasury 6 per cent 2028 down 7p at £132.68. Spain’s BES Finance sold a €750 million 2011 floating rate note.