LONDON: UK government bonds were steady on Thursday after the US Federal Reserve announced a new round of monetary stimulus but fears over a standoff in budget talks in Washington kept investors in nervous mood.
The Federal Reserve said on Wednesday it would buy $45 billion in Treasuries each month and keep interest rates near zero until the jobless rate falls to 6.5 percent, well below its current level, so long as inflation is contained.
At 0841 GMT, the March gilt future was 8 ticks higher at 119.00, broadly in line with the equivalent Bund , which was 11 ticks higher.
Britain's Debt Management Office will hold its last auction of the year, selling 1.1 billion pounds ($1.77 billion) of a 0.125 percent 2024 index-linked gilt, for which strategists expect good demand.
"The auction is likely to attract switch interest given the concession evident in the 2024s vs surrounding maturities," said Citi strategists.
"However, the outright level of real yields and break-evens look rich and vulnerable to a correction," they added.
Investors will also look towards industrial trends data from the Confederation of British Industry, at 1100 GMT, which economists polled by Reuters expect to show a moderate fall to -16 from the previous month's reading of -21.
Ten-year gilt yields fell nearly 1 basis point to 1.82 percent, with their spread over equivalent Bund yields steady at 49 basis points.
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