LONDON: British government bonds followed their German counterparts higher on Wednesday, driven by concerns about Spain's reluctance to seek a bailout and fresh worries about global growth.
A relatively thin events calendar in Britain looked unlikely to provide the market with much extra momentum.
The Bank of England's credit conditions survey due at 0830 GMT was set to reflect banks' caution when lending to smaller firms while economists expected the CBI retail survey for September to show a modest improvement in sales.
At 0747 GMT, the December gilt future was 69 ticks higher at 120.10, in line with the equivalent Bund future, and near a 2-week high of 120.17 hit earlier.
"The latest (euro zone) debt crisis issues, and principally worries about Spain, have helped to propel core/safe-haven government bonds back up," analysts at Informa Global Markets said in a note.
British gilts have been benefiting from the euro zone debt crisis as investors seek refuge in the perceived safety of non-euro zone bonds.
On Wednesday, investor confidence waned that Madrid would soon seek a bailout needed to trigger the European Central Bank's latest crisis-fighting measures.
Prime Minister Mariano Rajoy, who is facing protests against further austerity measures, was quoted by the Wall Street Journal as saying he would ask for aid if the country's borrowing costs remained too high for too long.
Weaker risk appetite also supported government bonds. European equity markets tracked losses on Wall Street and in Asia as global growth worries came to the forefront again.
Markets will also watch a sale of 10-year German government debt and data on US home sales later in the session.
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