European, Gilt and US Tsy bonds are....>

BOND SUMMARY: European, Gilt and US Tsy bonds are trading mixed in mid-morning

London trade with markets waiting for next directional move as focus turns to

flash inflation data from Germany, the start of the EU summit and BTP auction.

- US Tsys slipped lower during Asian session and then extended losses at start

of European session, weighed by a a block sell in TYU8 @ 120-08+ in 7.55k. Tsys

recovered though and TYU8 trades at 120-10+, with 10-yr yield 0.9bp higher at

2.8346% and curve modestly steeper as short-end remains anchored.

- German Bunds have fluctuated around Wednesday's closing levels, as German

region flash CPI data crosses the wires, pretty much in-line with expectations,

however Italy flash HICP rose more than expected in June. German 10-yr yield is

0.4bp lower at 0.3187%, curve seen shifting lower.

- EMU periphery have started to widen against Germany, coming under mild

pressure following CCTeu and 5-/10-yr BTP auctions. 10-yr Bund/BTP spread is

3.4bp wider at 252.2bps and Bund/Bonos 1.5bp wider at 104.8bps.

- Gilts are stuck between either following US Tsys or German Bunds with curve

pivoting around 10-yr sector. 2s/10s is 1.2bp steeper & 10s/30s 0.5bp flatter