LONDON: Gilts climbed early on Monday, correcting what dealers saw as an excessive slide the previous session on the back of strong US employment figures.
Uncertainty over the timing of a Spanish bailout request and low expectations ahead of a euro zone meeting provided additional support to safe-haven assets.
At 0816 GMT, December gilt futures were 34 ticks higher at 120.28, while equivalent Bunds were 42 ticks up. On Friday the British contract hit its lowest level since Sept. 25 before paring losses slightly to settle 66 ticks lower on the day.
Data on Friday showed the US unemployment rate unexpectedly dropped to 7.8 percent in September and reached its lowest level since President Barack Obama took office.
"It's just been a bit of a rougher overnight session for risk assets, there's a bit of a feeling that things were slightly overdone from the interpretation of the employment report in the US," said Sam Hill, strategist at RBC Capital Markets.
"A fall in the unemployment rate on the face of it looked very significant but...a large rise in part-time work and so on suggests there's one or two reasons (to think) that it's not maybe as significant as it seems at face value," he added.
News of possible further public spending cuts in Britain also underpinned gilts, Hill said.
Britain's Conservative-led government would cut an extra 10 billion pounds a year from its welfare budget and slash spending across the board in the next phase of austerity if re-elected, finance minister George Osborne will say on Monday.
Euro zone finance ministers will formally launch the euro zone's permanent, 500 billion euro bailout fund on Monday, and will also discuss an expected request by the Spanish government for a precautionary credit line from the ESM.
Ten-year gilt yields fell 3.5 basis points on the day to 1.737 percent.
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