The March gilt future settled 45 ticks down on the day at 114.72, while 10-year gilt yields were 5 basis points up on the day at 2.23 percent, leaving the yield spread versus Bunds broadly unchanged at 26 basis points.

Trading was sluggish, with little British news and US markets shut for a public holiday.

"It's been deadly quiet," said Monument Securities strategist Marc Ostwald. "Everyone is waiting for the fat lady to sing on Greece."

Gilts fell as UK shares rose 0.6 percent on the day, supported by rising risk appetite on expectations euro zone finance ministers will approve a second bailout for Greece later on Monday after months of uncertainty.

Strategists also said that risk appetite was being boosted by China's decision to lower bank reserve requirements at the weekend, boosting the amount they can lend.

Short-dated gilts outperformed 10-year gilts by 1-2 basis points due to support from the Bank of England's buyback of 1.5 billion pounds of 3-7 year gilts as part of its quantitative easing programme. This week the buy back attracted offers totalling 2.94 times the sum sought by the central bank, up from 2.75 times last week.

Markets were also positioning for a flood of ultra-long index-linked gilts this week, with the syndicated sale of the 2062 inflation-protected bond expected on Tuesday or Wednesday.

Analysts expect strong demand for the bond, even though its price has not fallen as much as might be expected in the run-up to the sale.

"This, we ascribe to underlying end-user interest in such a product and believe that it is this which is maintaining the IL62s at relatively rich levels versus its peers in seasonally adjusted terms," analysts at Lloyds Corporate Markets said in a note.

Ostwald said he expected the sale itself to go smoothly, but that he would be looking to see whether investment funds were funding purchases by selling shorter-dated index-linked gilts, rather than bringing new money into the market.