Prices up on bonds after new bombing threat

Prices were up for government bonds in the UK and the eurozone on Thursday after reports of new bombings in London, having been initially down on the day.

While there were few or no reports of casualties connected to the new incidents, prices rebounded although 2-year UK gilt prices remained lower than on Wednesday.

The 2-year gilt was up 1.5 basis points to 4.120 percent, while the 10-year gilt lost 2.5 basis points to yield 4.306 percent.

In the eurozone, meanwhile, the two-year Schatz fell 2.7 basis points to 2.201 percent and the 10-year bund was yielding 3.265 percent, down by 1.6 basis points.

Eurozone prices were helped by strong investor confidence in Germany and buying spurred by recent gains in yields.

However, disappointing consumer figures from Italy and France kept the overall economic outlook poor in the eurozone.

In the UK, data shows that while sales were up 1.3 percent in June, growth is still relatively weak and interest rates are still expected to be cut in August.

Meanwhile, in London trade prices were down on US Treasury bonds as the revaluation of the renminbi in China brought worries that long-term demand for US Treasuries might fall.

In afternoon trading, the 2-year Treasury bond gained 2.6 basis points to a yield of 3.903, while 10-year yields were up by 5.3 basis points to 4.211 percent.

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