Bank of England holds rates, bonds rise

Gilt prices in the UK went higher on Monday after a Bank of England decision to let its main interest rate remain at 4.75 percent for the ninth month in a row and after manufacturing figures for March were weaker than they were expected to be.

The report showed that manufacturing output fell by 1.6 percent in March compared with the previous month. This was the third consecutive monthly retreat a larger drop than had been expected.

Industrial production, which provides around 20 percent of the gross domestic product, was down 1.2 percent from the previous month. It was expected to go up in March.

Yields on the two-year gilt were up 4.4 basis points at midday, to 4.483 percent. Yields on the 10-year gilt advanced 2.2 basis points to 4.571 percent.

These higher gilt prices coupled with a healthy report on U.S. labor figures that was released on Friday sent prices up and yields down in the European government bond market.

The two-year Schatz was yielding 2.249 percent and yields on the 10-year Bund sat at 3.429 percent.

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