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UK gilts strengthen on weak risk appetite

The UK gilts strengthened Tuesday as investors preferred safe-haven assets after oil prices slipped on fading optimism for an output-limiting deal during an oil producers’ meeting in Algeria.

The yield on the benchmark 10-year gilts, which moves inversely to its price, fell 3  basis points to 0.680 percent, the super-long 30-year bond yield dipped 2-1/2 basis points to 1.373 percent and the yield on short-term 2-year bond slid 1 basis point to 0.80 percent by 10:40 GMT.

The UK gilts have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the Bank of England's target. Crude oil prices fell as investors cashed in profits after relishing previous three percent jump in prices. The International benchmark Brent futures fell 1.44 percent to $47.26 and West Texas Intermediate (WTI) dipped 1.48 percent to $45.25 by 10:40 GMT.

In term of recent economic data, the UK CBI's Retail Sales balance for Sep fell to -8, vs expectation of +5 and the previous figure of 9. This is just above July's balance of -14.

Lastly, investors remained keen to focus on the series of upcoming economic data, highlighted by HPI, business investment and Q2 GDP data.

Meanwhile, the FTSE 100 traded 0.26 percent lower at 6,800 by 10:40 GMT.

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