LONDON: British government bond futures touched a five-day high on Wednesday as weak services sector data for China and much of Europe led investors to reduce their risk exposure.
Later in the day, the release of a stronger-than-expected US ISM services measure and robust ADP jobs data failed to lift European investors' downbeat mood, even while US Treasuries weakened.
The December gilt future settled 27 ticks up at 120.72, in line with the equivalent Bund and just off a session high of 120.83 - its highest level since Friday.
Ten-year gilt yields were 2 basis points lower at 1.69 percent. Their spread over Bunds was 1 basis point tighter at 24 basis points, slightly extending Tuesday's outperformance after the gilt did well at an auction.
"It's not just the bad Chinese data. Outside Ireland and Italy and Russia, all the PMIs (purchasing managers' indexes) we've had in the continental euro zone and indeed the UK ... have been somewhat disappointing," said Marc Ostwald, a fixed income strategist at Monument Securities.
"It's given some support to fixed income markets and a modest 'risk off' tone," he added.
China's normally robust services sector weakened sharply in September to record its slowest growth since November 2010 as a manufacturing slowdown began to feed through to the rest of the economy.
Britain's own services sector PMI also grew more slowly than expected, with employment falling for the first time in nearly a year.
The market's attention was turning to auctions on Thursday of French and Spanish debt, a key barometer of investors' risk appetite, strategists said.
Spanish Prime Minister Mariano Rajoy said late on Tuesday that a request for European aid was not imminent following a report the country could apply for help as soon as this weekend.
The Bank of England and the European Central Bank also conclude policy meetings on Thursday, but neither is expected to change their main policy stance.
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