The 2-yr to 10-yr part of the yield....>

GILT SUMMARY: The 2-yr to 10-yr part of the yield curve has pared earlier mild

losses while the 15-yr to 50-yr sector has extend gains in London afternoon

trade, supported by the soft US new homes sales data. Yield curve remain

modestly flatter.

- 2-yr Gilt yield is +0.7bp at 0.765%, 5-yr +0.6bp at 1.025%, 10-yr +0.4bp at

1.271%, 30-yr -0.7bp at 1.706% & 50-yr -1.5bp at 1.536% according to Tradeweb.

- Gilt future hit intra-day low of 123.39 just before noon but quickly faded the

move as buyers entered the market with 10-yr Gilt yield at 1.280%. The future

then traded in a tight 9 tick range before larger than expected fall in US new

home sales underpinned renewed bid. G U8 last 3 ticks lower at 123.28.

- Earlier, short-end of the Gilt curve came under some selling pressure likely

weighed by rise in mortgage approvals to a 9-month high and a boost in retail

sales volume growth in July.

- Short sterling contracts are steady to 1 tick lower, curve little changed

volumes have been thin though. Little data from the UK in next 2 days so

attention likely to be on ECB meeting tomorrow.