LONDON (ShareCast) - Gilts are down as expectations of possible rise in interest rates were heightened after minutes from the Bank of England's meeting showed policymakers were tugging in all directions.

Timothy Besley argued for a rise to help combat inflation. The professor became the first Monetary Policy Committee (MPC) member to call for higher borrowing costs in over a year, minutes from the July 9-10 gathering revealed today.

As expected, perennial dove David Blanchflower voted for a quarter point cut, but the other seven MPC members, including governor Mervyn King, won the fight to keep rates at 5% for the third month in a row.

In other news, new mortgages approved by the big banks tumbled 23% month-on-month to hit a new low in June, according to the latest figures from the British Bankers Association.

Ten-year gilt yield is up 4 basis points to 5.04% while the two-year gilt yield is up 6 basis points at 5.1%.

German bunds are mixed while the US ten-year treasury yield is up 4 basis points to 4.14%.

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