Gilts are trading little changed.......>

GILT SUMMARY: Gilts are trading little changed having recovered opening losses,

following soft German ZEW survey and UK CBI manufacturing activity. Reports of

EU parliament offering "privileged" access to single market was quickly pushed

aside.

- 2-yr Gilt yield is +0.2bp at 0.676%, 5-yr +0.3bp at 1.069%, 10-yr -0.2bp at

1.60%, 30-yr -0.1bp at 1.988% and 50-yr -0.1bp at 1.774%.

- Gilts opened lower and then extended losses reacting to overnight losses in US

Treasuries and weak start in German Bunds. There was little to no reaction to an

article in the Business insider that said the EU parliament will allow UK

"privileged" access to the single market as the UK would need to accept

jurisdiction of the ECJ. This did not stop cable temporarily trading above $1.40

- Gilts started to recover however, in wake of disappointing German ZEW data and

then following softening in UK CBI manufacturing activity that showed

expectations of output prices falling sharply from last month's 34-yr high.

- UK Breakevens are little changed after trading wider earlier, while swap

spreads are marginally tighter.