Gilts are expected to remain supported by economic data this week, kicking off with inflation figures on Tuesday.

Initial buying of British debt pushed the yield on 10-year paper close to an all-time low on Monday as investors digested S&P's downgrade of euro zone debt on Friday but the downgrade had been well flagged and was later seen overdone.

Activity was limited due to a public holiday in the United States.

"There wasn't much obvious fixed income reaction to the downgrade: it was well flagged and the market moved on the day, but people had been expecting it for a while," said Francis Diamond, a gilts strategist at JP Morgan.

Analysts said they were more concerned about the breakdown of talks over a Greek bailout.

Barclays Capital strategist Moyeen Islam said he did not think that a 50 percent haircut on Greek debt and a 50 percent private sector participation rate in a bond swap would be enough to return Greece to a fiscally sustainable path.

That meant investors were likely to maintain pressure on peripheral euro zone debt, which would help underpin gilts, he added.

The March gilt future settled unchanged on the day at 117.10, while the equivalent Bund settled 8 ticks lower.

In the cash market, the yield on 10-year gilts was broadly flat at 1.97 percent, having hit a low of 1.924 percent shortly after the open according to Reuters data - a whisker away from the record low 1.922 percent struck at the end of December.

Analysts reckon gilts will remain supported by economic data this week. Inflation figures on Tuesday are expected to confirm the Bank of England's view that price pressures are easing sharply and fuel expectations the central bank will expand its quantitative easing programme next month.

"With a falling inflation number expected later this week and a weak retail sales number at the end of the week, we think the market can consolidate at these levels," Islam said.

The Bank of England said it received offers totalling 3.24 times the 1.7 billion pounds' worth of gilts with a maturity of three to 10 years it offered to buy on Monday in a reverse auction, up sharply from the previous week's buyback.

This was the highest cover ratio since Oct. 17, and March gilt futures pared gains by around 15 ticks after the news.

Lloyds strategist Vatsala Datta said investors were particularly keen to sell their gilts to the central bank because of an auction of 4 billion pounds of 2016 gilts coming up on Thursday.

Gilts with maturities of 25 years and over outperformed 10-year gilts, but Datta said this trend might reverse, and the curve could steepen ahead of a syndicated sale of 2052 gilts next week.

"Today it's not reacting but overall the curve is steepening a bit, it's generally on the back of syndication coming up. Once that is out of the way, we look for further flattening on the curve on a relative basis versus Bunds and Treasuries."