Gilts have rallied during London.......>

GILT SUMMARY: Gilts have rallied during London morning session, supported by

flight-to-quality bid as political tensions increase in the Middle-East, Japan's

Abe calls for early elections and as markets digest full-out from German

Elections.

- 2-yr Git yield is -2.0bp at 0.433%, 5-yr -2.4bp at 0.752%, 10-yr -2.6bp at

1.338% and 30-yr -2.5bp at 1.911% according to Tradeweb.

- Gilts opened little changed, unaffected by the surprise UK rating downgrade on

Friday evening as markets digested the German lection results that should Angel

Merkel winning a fourth consecutive term, but the far-right AFD party gaining

enough votes to get seats in the Bundestag.

- Sharp spike in Bunds due to split in AfD party though dragged Gilts higher,

while comments from Turkey's PM Yildirim that the Iraqi Kurd's independence vote

was "laying the grounds for hot conflict and confirmation of early elections in

Japan, also led to flight-to-quality bid.

- Brexit talks resume in Brussels, but expectations are low, despite Mays speech

- UK breakevens are 1.3bp-2.0bp tighter, while swaps spread are little changed