Gilts have pared opening move higher...>

GILT SUMMARY: Gilts have pared opening move higher as concerns over unstable

political situation in Italy reseeds and stocks rebounded from opening losses.

Larger than expected rise in UK service PMI also weighing on Gilts. The 10-yr

Gilt is still the best performer on the yield curve.

- 10-yr Gilt yield is 1.8bp lower at 1.456% with 2s/10s 0.6bp flatter and 10s30s

0.9bp steeper.

- Gilts opened higher supported by risk-off sentiment following inconclusive

Italian election which saw anti-establishment parties do well and tick higher in

risk of a trade war in wake of comment from US Trump on car taxes.

- Gilts pared gains though, taking cue from fall in German Bunds as risk-off

move looked over done and equites recovered lost ground. UK Service PMI coming

rising to 54.5 in Feb from 53.0 in Jan and highest level in 4-months pushed

gilts lower and indicates UK GDP growing at just under 0.4% in Q1.

- The PMI's would not of included the likely hit to the economy following last

week's snow storm and which some newswires put at Stg1bln per day.

- Breakevens 0.5-1.3bp wider, swap spreads steady to wider led by +3.6bp in 2-yr