UK gilts have also opened on the back foot....>

GILTS: UK gilts have also opened on the back foot with yields so far around

0.8bp higher across the curve as both China Caixin service PMI and Japan Nikkei

service PMI notch higher. 10-yr Gilt yield is +0.8bp at 1.252%.

- In the UK, shop price deflation eased to 0.5% y/y in June from 1.1% y/y in May

the BRC said.

- Looking ahead, release of UK service PMI is the main event today with markets

consensus estimating it will remain at 54.0 in June. The figure is seen key to

the likelihood of the BoE raising rates in August or if. According to MNI PINCH,

markets are pricing in a 63.5% chance of a BoE rate hike in August, which then

increases to 87% for the November MPC meeting.

- Eyes will also be on latest developments within the UK government over its

supposedly third customs plan and whether PM May can win over the euro sceptics.

The key cabinet meeting will be on Friday, but leaks are expected.

- Markets though likely to be subdued today as US is closed for Independence

Holiday