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Bonds round-up: Gloomy industrial data boosts bonds

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Date: Monday 07 Jul 2008

LONDON (ShareCast) - UK gilts advanced as industrial output in May fell more than expected, dampening the prospect of an interest rate rise Thursday.

Output dropped 0.8% during the month, said the Office for National Statistics, much more than the 0.1% predicted by analysts.

The yield on the benchmark 10-year gilt fell by 5 basis points to 4.91%.

European bonds also moved higher, with German manufacturing figures mirroring the experience of the UK. German industrial output in May fell by 2.4% from the previous month.

The yield on the benchmark 10-year bund fell 5 ticks to 4.44%.

US bonds opened barely changed, with investor's attentions focused on equities, which opened firmer, with rises outnumbering falls by around four to one. However, forward momentum picked up as oil prices continued to retreat, reducing inflationary pressure and thus boosting the appeal of fixed income stocks.

The yield on a 10-year treasury fell 7 basis points to 3.91%.

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