LONDON: British government bond yields saw their sharpest fall in a month on Tuesday, pushed lower by a downbeat mood in global markets after weak trade data from China added to worries about the state of the world's second biggest economy.
Stock markets also sank after Chinese trade data came in far worse than economists had expected, sending safe-haven bonds such as gilts rallying.
The 10-year gilt yield fell 11 basis points on the day to 1.370 percent, the sharpest one-day fall since hitting a record low 1.225 percent on Feb. 8 - another day racked with worry about the global economy.
Thirty-year gilt yields fell by the largest amount, down 13 basis points on the day and touching their lowest level since Feb. 12 at 2.236 percent.
Rampant demand at an auction of 30-year Japanese government bonds - reflecting a rush for yield among Japanese investors as shorter duration JGB yields head to zero - also helped to boost higher-yielding debt such as gilts.
"If 30-year (JGB) yields come to ridiculously low levels, then that might encourage ... people to move into something higher yielding, which could be gilts," said Jason Simpson, rates strategist at Societe Generale.
Britain received healthy demand at an auction of the 3.75 percent 2052 gilt, attracting bids worth 1.73 times the amount on offer.
"Certainly the headline stats looked decent enough. Demand was a lot higher than the 2060 auction in January," Simpson said, referring to a sale of the similar 4.0 percent 2060 gilt on Jan. 7 that attracted bids worth just 1.25 times the amount on offer.
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