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Date: Friday 18 Apr 2008

LONDON (ShareCast) - Gilts extended losses as UK public sector borrowing for the last financial year rose while better than expected results from US bank Citigroup saw investors rush back to stocks.

Public sector net borrowing (PSNB) was £35.6bn in the fiscal year to 31 March 2008, according to the Office for National Statistics, up from £30.1bn a year earlier. Even so, the figure was less than Chancellor Alistair Darling's forecast of £36.4bn.

Investors also switched away from government bonds and into stocks, particularly banking after Citigroup's results. It posted quarterly losses of $5.11bn compared with profits of $5bn last year, which was considerably less than the $10bn loss posted in the fourth quarter.

UK two year gilt yield rose 2 basis points to 4.38%, while the ten-year bond yield surged 8 basis points to 4.73%

The US ten-year treasury yield jumped 9 basis points to 3.83%.