U.K Gilts gain on weak manufacturing PMI amid Brexit angst

The U.K government bonds strengthened Tuesday after reading weak-than-expected April manufacturing PMI figure amid rising worries among investors about the up-coming June referendum. Also, tumbling crude oil prices drove investors towards safe-haven assets. The yield on the benchmark 10-year bonds, which moves inversely to its price, moved lower 1.25 pct to 1.578 pct and the yield on the 2-year bonds dipped 2.31 pct to 0.508 pct by 0850 GMT.

The United Kingdom April manufacturing PMI declined to 49.2 (lowest since February 2013), against market expectation of 51.2, from 51 in March. Moreover, the British bonds have been closely following developments in oil markets because of their impact on inflation expectations. Today, crude oil prices tumbled by snapping 6-month high as rising production in the Middle East outweighed a decline in U.S. output and a recent slide in the dollar, which has been supporting crude. OPEC supplies rose to 32.64 million barrels per day in April, from 32.47 million barrels per day in March, according to a Reuters survey. That almost matches January's 32.65 million barrel per day, when Indonesia's return to OPEC boosted production to the highest since at least 1997. The International benchmark Brent futures fell 0.98 pct to $45.37 by 0845 GMT.

In a new EU referendum poll by ICM published in the Sunday Sun, the Brexit side leads by 46 pct to 43 pct and remaining 11 pct are still undecided. While 45 pct said that immigration in United Kingdom is the biggest factor in the vote. Meanwhile, The FTSE 100 fell 0.74 pct or 46.39 points to 6,195.50 by 0850 GMT.