A peripheral bond rally paused last week as Spanish Prime Minister Mariano Rajoy faced calls to step down over corruption allegations and another scandal involving Monte dei Paschi bank fuelled political uncertainty before Italian elections.

Investors will focus on a euro zone finance ministers meeting later in the day, where the strength of the euro is likely to be discussed before a G20 meeting at the end of the week.

"The main event is likely to be the meeting of euro zone finance ministers ... this will likely see a discussion of the current situation in peripheral Europe," said Barclays strategists.

At 0923 GMT, the March gilt future was 10 ticks lower at 116.22, while the equivalent German Bund future was 2 ticks lower on the day.

Ten-year gilt yields rose nearly 2 basis points to 2.12 percent, while their spread versus Bunds was nearly 2 basis points wider at 50 basis points.

Investors will be gearing up for the Bank of England's Inflation Report on Tuesday when the bank will update its forecast for the UK economy this year. It is also expected to predict that inflation will rise further above its 2 percent target than it forecast three months ago.

That would be negative for gilts but Barclays expects the bank, at a news conference on Tuesday, to signal that it is not becoming too worried about inflation.

"The MPC is likely to want to persuade markets that it has not become materially hawkish, despite having to raise its inflation forecast profile once again," said Barclays strategists.

"As was highlighted in the statement accompanying last week's policy decision, inflationary pressures from recent rises in administered and energy prices have been added to by the fall in sterling, and inflation "may remain above the 2 percent" target for the next two years."