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Date: Monday 14 Jul 2008

LONDON (ShareCast) - US bonds advanced after financial stocks led shares lower on concerns of further trouble in the US banking system. Even Freddie Mac and Fannie Mae, which had surged in early trading following last night’s announcement by the government that it would intervene to prevent their collapse, fell into the red.

The yield on a 10-year treasury fell back ten basis points to 3.86%.

The news also had an impact on European bonds, with UK gilts largely unchanged having fallen back earlier on fears that the US government may have to flood the market with Treasury bonds in order to fund the Treasury Department’s funding plans for Freddie Mac and Fannie Mae.

The yield on a 10-year gilt was unchanged at 4.90%.

The yield on Germany’s benchmark 10-year bund was marginally down at 4.40%.

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