Gilts have recovered from opening......>

GILT SUMMARY: Gilts have recovered from opening losses and are trading steady to

touch higher following disappointing construction PMI and reports that Michel

Barnier favours a Canada-plus trade plan rather than the Chequers proposal.

Yield curve is slightly bull steepening as short-end ticks higher, but long-end

remains anchored.

- 2-yr yield is -0.4bp at 0.728%, 5-yr -0.8bp at 1.016%, 10-yr +0.1bp at 1.408%,

30-yr unch at 1.758% & 50-yr -0.1bp at 1.619% according to Tradeweb

- Dec Gilt future opened lower for 2nd consecutive day weighed by mild risk-on

sentiment as European stocks edged higher and BTPs extend Mondays rally.

- Sentiment reversed however, as stocks faded gains on back of DB possibly being

kicked out of Euro Stoxx 50 index, then by weaker than expected UK construction

PMI (52.9 vs 54.9) and finally by comments from ITV's Robert Peston.

- Peston, quoting sources, said that Barnier is willing to "countenance" David

Davis' Canada-Plus free trade agreement rather than PM May's Chequers plan.

- Short sterling futures are steady to 2 ticks higher in light volume, strip

little changed while breakevens are between 1.2bp and 1.8bp wider.