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Bonds climb as stocks slip

Date: Thursday 17 Dec 2009

With stocks falling across the markets, investors had an appetite for the safety of government debt.

Here, a surprise fall in retail sales reminded investors of the tough times still facing the UK economy.

The volume of sales in UK shops in November fell 0.3% from the previous month against expectations of a similar rise, figures from the Office of National Statistics (ONS) show. In value terms, sales fell by 0.2%.

The ONS said the decline was largely due to lower department store sales and weak clothing demand.

Miners and banks were among the stocks leading the FTSE 100 lower, with investors preferring to invest in bonds.

The yield on a 10-year gilt fell by three basis points to 3.86%.

In mainland Europe, attention was focused on Greece, where the 10-year bond surged by 29 basis points after rating agency Standard & Poor’s cut the country’s credit rating to BBB+ from A-.

But German bonds were higher in line with other markets and the yield on its 10-year bund fell by five basis points to 3.15%.

US bonds also gained as stocks fell. The yield on the 10-year treasury fell eight basis points to 3.52%.

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