UK gilt yields touch more than 1-month high on Barnier comments

LONDON: British government bond yields rose to a more than one-month high on Tuesday, extending gains a day after the European Union's chief Brexit negotiator Michel Barnier said a deal with Britain was possible within six to eight weeks.

The yield on the 1.625 percent 2028 gilt , the new 10-year benchmark, rose to 1.509 percent in early trade, its highest level since Aug. 3, the day after the Bank of England raised interest rates to a post-financial crisis high.

At 0740 GMT it stood at 1.49 percent, up 2 basis points on the day.

Sterling hit a five-week high against the dollar on the comments from Barnier, who told a forum in Slovenia on Monday that Britain and the EU could reach a deal if both sides were realistic.

Stronger-than-expected economic growth figures for Britain on Monday also supported the pound and gilt yields.

"I was surprised at the timidity of the price reaction from the gilt curve on Monday. I wouldn't be surprised if there's been a little bit of follow-through after that," Societe Generale strategist Jason Simpson said.

Yields were up uniformly across the curve by a couple of basis points on average, underperforming euro zone debt.

The gap between the 10-year gilt and 10-year German Bund yields widened by around one basis point to 108 points.