Gilts opened little changed and are....>

GILT SUMMARY: Gilts opened little changed and are drifting around Friday's

closing levels as markets react to surprise rating downgrade of the UK to Aa2 by

Moody's on Friday and the German election result that saw Angel Merkel win a

fourth term but also saw rise in support for the far right AfD party.

- 10-year Gilt yield is currently 0.3bp lower at 1.361%

- As a recap Moody's said that the "outlook for the UK's public finances has

weakened significantly" and that "fiscal pressures will be exacerbated by the

erosion of the UK's medium-term economic strength".

- Markets attention though is more concentrated on German election results were

the CDU/CSU party's share of the vote dropped to 33% from 41%, while the AfD

party gained 13% of the vote. Analysts talk of there being less chance of EU

reform.

- Looking ahead Brexit negotiations start for another week, however there are

low expectations as PM May's Speech in Florence on Friday was seen short on

details and not enough to break the impasse.