Gilts extended their sell-off in.......>

GILT SUMMARY: Gilts extended their sell-off in late London afternoon trade

likely weighed by announcement of 10-yr and 20-yr European government bond

syndication deals from Portugal and Italy respectively. Yield curve is steeper

as 10-yr to 30-yr part of the yield curve underperforms.

- 10-yr Gilt yield is 2.5bp higher at 1.261%, while 2s10s is 1.5bp steeper.

- Gilts attempted at a recovery at start of NY session after seeing selling at

the start of Tuesday's session but the twin announcements by Portugal and Italy

of upcoming 10-yr and 20-yr supply weighed heavily on bond markets with Gilts

hitting session lows shortly afterwards.

- Earlier, Gilts opened lower taking cue from mild weakness in US Treasuries and

long-end of JGBs overnight as BoJ trimmed purchases in that area while risk

sentiment remained broadly positive

- Decent 10-yr Gilt auction and continuing concerns over the strength of PM

May's leadership following a messy cabinet reshuffle then underpinned recovery.

- Breakevens are wider/steeper with 30-yr +2.8bps, while swap spreads are circa

1.5bp tighter across the board