Investor appetite for riskier assets grew after US President Barack Obama and US House of Representatives Speaker John Boehner signaled intent that the Republicans and the White House could soon strike a deal to avoid a $600 billion "fiscal cliff" of austerity measures.

Late on Wednesday Bank of England data on lending to individuals, released a day earlier than expected, showed British mortgage approvals hit their highest level since January last month, but there was a sharp fall in consumer credit.

The BoE said October money supply data would be released at its scheduled time of 0930 GMT on Thursday.

Investors are also awaiting the central bank's half-yearly Financial Stability Report and news conference with Governor Mervyn King.

At 0901 GMT, the December gilt future was 9 ticks ticks lower at 120.06, while the equivalent Bund was 24 ticks lower.

"We continue to see near-term scope for gilts to outperform the German counterpart on the back of no supply till Dec. 11 and (the) Dec. 7 index extension event, along with lower revisions to gilt supply for the rest of the year in the Autumn Statement," Lloyds strategists wrote in a note.

Finance minister George Osborne will give his autumn economic statement to parliament on Dec. 5.

Gilts were partly underpinned by data from mortgage lender Nationwide showing that British house prices stagnated again in November, disappointing economists' forecasts for a tick-up.

Ten-year gilt yields were broadly steady at 1.775 percent. Their spread versus Bund yields was 2 basis points tighter at 38 basis points.