LONDON: The 10-year gilt yield fell to its lowest level in more than a year on Thursday as the market digested new forecasts from the Bank of England, while poor euro zone data also boosted British government bond prices.
The 10-year gilt yield hit its lowest level since Aug. 5 last year at 2.392 percent, shortly after both French and German data indicated that economic growth in the euro zone had stalled.
It was last down around 2 basis points on the day at 2.42 percent at 0948 GMT.
Two-year and five-year gilt yields also fell sharply, having plummeted in the previous session after the BoE dented expectations of a first interest rate hike this year when it slashed its forecast for wage growth.
Jamie Searle, strategist at Citi, said the gain in gilt prices was mostly down to the market taking in the BoE's Inflation Report, released on Wednesday.
"There has been some data in Europe which is perhaps feeding into the performance of gilts in the long end of the curve. But the moves are really led by the front-end, and that's a continuation of what we saw yesterday," he said.
The premium that 10-year gilts offer over the equivalent German Bund also narrowed by around a basis point, hitting a session low of 139.1 basis points, its lowest level this week.
German 10-year bond yields fell to a record low on Thursday as the weak euro zone economic growth data bolstered bets the European Central Bank will have to ease policy again.
Britain will publish the second reading of second-quarter gross domestic product on Friday. Economists polled by Reuters expected no revision from the 0.8 percent quarter-on-quarter expansion announced previously.
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