LONDON: British government bonds held broadly steady on Thursday, as investors braced for retail sales data and debt auctions in Britain and Spain after a slowdown in Chinese economic growth.
Investors will be looking towards September retail sales data which is expected to show an improvement in consumer confidence following jobs data on Wednesday, which saw employment rise to its highest level since 1971.
At 0755 GMT, the December gilt future was 3 ticks higher at 118.57, having hit a one-month low of 118.34 earlier and moving in line with the equivalent Bund future.
"Retail sales will be of interest, retailers suggested that the Olympic games weighed on sales during the summer period, but with the games behind us, a rebound is expected today," Lloyds strategists wrote in a note.
Britain will also sell 3.75 billion pounds ($6.06 billion) of 4.5 percent 2019 gilts later this session, which Lloyds strategists said was expected to see good demand, .
"The stock has cheapened and is also the shortest gilt yielding above 1 percent ... and we expect to see a good demand for the auction stock."
Investors showed increased appetite for risk after Chinese GDP data eased some fears the world's No.2 economy may be slowing and on renewed bailout hopes for Spain ahead of a Spanish auction.
Spain's borrowing costs are set to fall at the sale of up to 4.5 billion euros of bonds after Moody's affirmed the country's credit rating and with Madrid expected to ask for aid soon.
"The Spanish bond auction this morning will be of particular interest," Lloyds strategists wrote in a note. "The target is slightly higher than previous auctions at around 3.5 to 4.5 billion euros but should be achieved."
Investors are eyeing the start of the EU summit with interest, which is expected to focus on Greece and Spain, though it is doubtful any definite announcements will be made, they added.
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