LONDON: British gilts fell early on Wednesday, following Bunds, with dealers reluctant to take big positions as long as uncertainty over Spain's possible request for a bailout persisted.
At 0749 GMT the December gilt future was 26 ticks down at 120.11, while the equivalent Bund was 17 ticks lower.
"Price action in gilts remains lacklustre as external developments continue to drive the market," Lloyds rates strategists wrote in a note.
"We seem to be back in no-man's land where the lack of conviction in market direction remains high. The key question still remains when will the market run out of patience if Spain doesn't apply (for aid) and when do investors stop giving Spain the benefit of doubt?"
Gilts came under slightly greater pressure than German government bonds after Bank of England Governor Mervyn King said late on Tuesday that monetary policy cannot prop up Britain's economy forever.
The central bank has bought almost 375 billion pounds of gilts to support the economy after the worst financial crisis since the 1930s, and King said there was no immediate barrier to stop it doing more.
But ultimately policymakers could not be "entirely sanguine" about using loose monetary policy to bring forward economic demand indefinitely, King said.
Ten-year gilt yields rose 3 basis points to 1.757 percent.
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