LONDON: Long-dated British government bond yields staged their biggest fall in a month on Tuesday, dragged down with other major bonds as fear of more North Korean nuclear tests pushed investors into the safety of high-rated sovereign debt.
On Sunday, North Korea said it tested a hydrogen bomb for a long-range missile, prompting a US warning of a "massive" military response if it or its allies were threatened and spurring a rally in US Treasuries and German Bunds as a result.
Twenty-and 30-year British gilt yields each fell around 5 basis points, their biggest one-day declines since Aug. 3 when the Bank of England cut its growth forecasts for Britain's economy.
The 30-year gilt yield touched a day's low of 1.671 percent, half a basis point away from last Tuesday's two-month low. It ended the session only a little higher at 1.675 percent.
Investors, overwhelmingly domestic, also displayed strong appetite for long-dated debt at a sale via syndication of 50-year conventional bonds.
Britain sold 4 billion pounds ($5.2 billion) of the 2.5 percent 2065 gilt but attracted orders worth 25.2 billion pounds, the second highest on record at a syndication.
"Once again very strong support was mobilised from our core investor base," Debt Management Office chief executive Robert Stheeman said in a statement. Domestic investors accounted for 90 percent of the allocation, the DMO said.
Earlier the DMO said the gilt was sold at a price that gives an average yield of 1.547 percent, equivalent to half a basis point more than the yield of the 3.5 percent 2068 gilt that is used as a benchmark.
Yields on the benchmark 50-year gilt later fell almost 6 basis points on the day to 1.51 percent, and those on the 2065 gilt dropped a similar amount.
The 10-year gilt yield fell 5 basis points on the day, touching a low of 1.01 percent - not far off last Tuesday's more than two month low.
The yield spread between 10-year gilts and the equivalent German Bund narrowed by around a basis point to 68 basis points.
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