LONDON: British government bond prices sank to their lowest level in just over a week on Wednesday, during volatile trade driven by changing expectations of whether a further escalation of the Ukraine crisis could be averted.
Gilts tracked German Bunds and U.S. Treasuries lower, as world markets jumped after Ukrainian President Petro Poroshenko said a ceasefire had been reached with Russia.
While strong British business survey data helped to boost sterling and pushed the FTSE 100 to a 14-year high, there was a relatively muted reaction from gilt prices, which extended losses slightly after the figures.
Long and medium-dated gilts performed worst on the day, with the 10-year yield rising to 2.48 percent as of 1344 GMT. It had hit a session peak of 2.509 percent, its highest since last Monday, following news of a possible ceasefire in Ukraine.
The 10-year yield briefly fell around 3 basis points immediately after a spokesman for Russian President Vladimir Putin said no ceasefire had been agreed.
However, it soon returned to previous levels. Putin later said he and his Ukrainian counterpart were "very close" on finding a political solution to the conflict.
The thirty-year gilt yield also rose more than three basis points on the day, and at one point touched 3.126 percent, its highest level in nearly two weeks.
The yield spread between the 10-year gilt and equivalent German Bund was last up almost two basis points on the day at 153 basis points.
It had hit a session high immediately after the news from Ukraine of 154.4 basis points, its highest level since last Tuesday.
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