Gilts look set to close Tuesday........>

GILT SUMMARY: Gilts look set to close Tuesday modestly higher, curve touch

flatter, reversing earlier morning losses on return to risk-off sentiment. There

was no real catalyst for the turn around, however, stocks slipped from highs and

oil pared gains on Iran threat.

- 2-yr Gilt yield is -0.8bp at 0.698%, 5-yr -1.6bp at 0.986%, 10-yr -1.2bp at

1.244%, 30-yr -2.1bp at 1.703% & 50-yr -1.8bp at 1.552% according to tradeweb.

- Gilts opened lower and then extended losses weighed by 10-yr Gilt re-opening

auction and mild risk-on sentiment as concerns of possible German coalition

government breakup receded.

- Gilts started its long road to a recovery just before midday London time but

there was little seen to trigger the move apart from slight fade in European

stocks, sharp drop in price of oil and return to risk-off sentiment.

- Sterling futures are mixed, curve flatter as blue contracts rise by 2 to 3

ticks while white and red contracts are steady to 1 tick lower. Markets await UK

service PMI tomorrow and comments from BoE Governor Mark Carney on Thursday.