LONDON: Gilts meandered lower on Tuesday, broadly in line with German Bunds, on speculation that euro zone leaders might reach a resolution on securing another tranche of aid for Greece.
At 1144 GMT, the December gilt future was 23 ticks lower at 119.82, while the equivalent Bund was down 33 ticks.
"(Gilts) are moving in sympathy with Bunds, and Treasuries are softer as well, partially explained by the possible reaching of a resolution on the next tranche of Greek aid," said RBC Capital Markets strategist Sam Hill.
Earlier this session Britain's Debt Management Office held an auction of 4.5 billion pounds of 1 percent gilts due 2017, which was covered 1.59 times.
"It was a little bit softer than we might have been used to previously, but I think you could argue that that is probably what is to be expected, given that we're now operating in a post-QE environment," said Hill.
Markets also digested news released late on Monday that credit ratings agency Moody's stripped France of its top triple-A grade to Aa1, citing an uncertain fiscal outlook and deteriorating economy.
The move follows a similar downgrade by Standard & Poor's in January and had been widely expected.
Ten-year gilt yields rose almost 3 basis points to 1.80 percent. Their spread versus Bund yields was a touch tighter at 41 basis points.
Gilt investors are awaiting the release on Wednesday of minutes of the Bank of England's most recent policy meeting.
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