LONDON: British gilts inched up in early trade on Tuesday, in line with German Bunds as uncertainty ahead of the US elections and renewed concerns about Greece saw investors dip back into safe haven assets.
Polls indicate the election between President Barack Obama and Republican challenger Mitt Romney will be a tight call with the risk of a change in fiscal and monetary policy in the world's largest economy keeping investors on the sidelines .
"Today's US elections will again keep activity to a minimum outside of the seemingly endless stream of corporate bond issuance," said Marc Ostwald, strategist at Monument Securities.
"Though euro zone headlines will continue to offer the potential for brief flurries of volatility," he added.
At 0902 GMT, the December gilt future was 12 ticks higher at 119.69, broadly in line with its German counterpart up 11 ticks at 142.24.
Markets digested retail sales figures released overnight, which showed a sharp slowdown in October, as Britons tightened their belts and limited their spending to essential items, according to the British Retail Consortium.
The data may deliver a more realistic snapshot of the British economy than the GDP figures in the third quarter, which showed 1 percent growth due to exceptional factors such as the Olympics this summer.
House prices were 0.7 percent lower in October than in the previous month, according to the latest Halifax House Price Index. Economists polled by Reuters expected the index to show a rise to 0.3 percent in September.
Gilt investors are also awaiting economic data releases, with manufacturing production figures for September expected to show a small monthly rise, while October car registration numbers could shed some light on Britons' willingness to spend.
Markets will also have to digest fresh gilt supply as the Debt Management Office will sell 3.25 billion pounds of 1.75 percent 2022 debt, which is expected to see good demand according to Citi strategists.
Ten-year gilt yields were steady to 1.811 percent, with their spread versus Bund yields unchanged at 39 basis points.
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