The Office for National Statistics releases August inflation data at 0830 GMT. After an unexpected jump in July to 2.6 percent, the market is keen to see inflation resume its course down to the level of just over 2 percent the Bank of England forecasts for the end of this year.

The higher the number, the lower the chances of a further round of Bank of England gilt purchases in November - currently the market's central expectation - strategists at Lloyds said in a note to clients on Tuesday.

"While we concur with the market expectation of a modest decline in the year-on-year rate... recent rises in commodity prices do not suggest it is about to drop back as rapidly as previously hoped," they said.

"Recent comments from (BoE policymakers) Broadbent and Dale also suggest a less dovish tone might be heard from the Monetary Policy Committee if, as looks likely, growth and inflation are both a bit higher in Q3."

At 0739 GMT the December gilt future was 26 ticks up on the day at 118.61, lagging a 36-tick rise in German government bond futures.

Growing unease over slow progress towards a possible Spanish bailout request has pushed some investors to buy back into safe-haven assets after a recent sharp selloff that took 10-year gilt yields to a four-month high early on Monday.

Ten-year yields were 2 basis points down at 1.90 percent on Tuesday, well off Monday's peak of 1.987 percent, while their spread over Bunds was about 1 basis point wider from levels late on Monday, at just under 26 basis points.

At 1000 GMT an ONS committee gives an update on its thinking about whether the method for calculating retail price inflation should change. The comments will be closely watched in the index-linked gilt market.

Under consideration is a change to the formula used, so that RPI is closer to the generally lower consumer price inflation measure that the BoE uses as a target.