The June gilt future settled 48 ticks up on the day at 113.00, not far from the six-day high of 113.31 set at 0833 GMT, just after data showed a sharp fall in Germany's flash manufacturing and services PMIs, hot on the heels of similar news from France. However, gilts underperformed German government debt throughout the session, despite getting a brief boost from data showing the biggest fall in British retail sales in nine months - in part because investors were disappointed by poor demand at a sale of 900 million pounds of 30-year index-linked gilts. "The poor PMIs from the euro zone are a good reason for Bunds to outperform, and for gilts to be left following the move rather than leading it," said RBC gilts strategist Sam Hill. "We attach relatively little weight to the signal from retail sales anyway and the linker auction was pretty soft." The linker sale attracted a bid-to-cover ratio of 1.73, below the level of 2.02 which Hill said had been a recent average for index-linked gilt auctions. The gilt had failed to cheapen up sufficiently compared to its peers to be attractive, and also required investors to assume a relatively high rate of inflation for it to be a better bet than a standard 30-year gilt, Hill added. Ten-year gilt yields were 6 basis points down on the day at 2.32 percent, but the yield premium over Bunds still widened by 2 basis points on the day to 41 basis points as gilts underperformed. BNP Paribas strategist Shahid Ladha said this left scope for gilts to outperform over the coming week, particularly as markets seemed not to have fully digested the lower-than-expected 2012/13 gilt issuance announced after Wednesday's budget. Further short-term support came from the fact that the DMO plans no more gilt auctions for the rest of the month, while the BoE will continue to buy gilts next week as part of its quantitative easing programme, he added.