LONDON: British gilt futures rose in early trade on Thursday, outperforming Bunds, on the back of quarter-end buying, but analysts said gains would be limited ahead of Friday's closely-watched US employment report.
Mixed data on UK consumer sentiment and house prices provided little direction for gilts, and analysts said investors were more focussed on equity markets and events elsewhere.
At 0734 GMT, the June gilt future was 25 ticks up at 117.56, around 18 ticks ahead of the equivalent Bund, and unwinding half of the previous day's losses.
"It's a futures-driven move: there's an indication that there's not a lot going on in the cash market, and it's probably due to covering at quarter-end," said Marc Ostwald, strategist at Monument Securities. "That will keep us outperforming Bunds."
Other analysts said they expected the gains to be short-lived ahead of US jobless claims data this session and Friday's non-farm payrolls figures.
"The risk of firmer payrolls remains the key bear risk for bond markets and we do not expect month-end buying to be persistent for this reason," said Harvinder Sian, strategist at RBS.
Economists in a Reuters poll reckon US employers added a median 190,000 workers to their payrolls in March, with the jobless rate seen steady at 8.9 percent.
In the UK, the Bank of England will publish its credit conditions survey for the first quarter of 2011 at 0830 GMT, and BoE Monetary Policy Committee member David Miles will give a speech in London at 1015 GMT.
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