April 11, 2018 / 12:00 PM / a year ago

UK 10-year bond yields touch one-week low on Syria worries

LONDON, April 11 (Reuters) - British 10-year government bond yields fell to a one-week low on Wednesday as investors sought safe assets after U.S. President Donald Trump warned Russia that missiles “will be coming” in Syria.

June gilt futures extended gains by more than 35 ticks after Trump published a message on Twitter telling Russia to “get ready” as incoming missiles would be “nice, and new and ‘smart!’”.

Yields on 10-year gilts dropped to their lowest since April 4 at 1.360 percent at 1123 GMT, down 5 basis points on the day.

“I think you will find our friend ‘the Donald’ is responsible,” market strategist Marc Ostwald of ADM Investor Services said. “It is stoking the risk rally we had yesterday ... it’s all geopolitics-related.”

There was little lasting market reaction earlier in the day to data showing weaker-than-expected factory and construction output, partly due to snowy weather.

Britain’s National Institute for Economic and Social Research (NIESR) said first-quarter economic growth was likely to slow as a result to 0.2 percent from 0.4 percent in the last three months of 2017.

The BoE has forecast 0.3 percent growth for the first quarter but Ostwald said he did not expect the weak data would shift expectations for a rise in interest rates next month.

“I think because the market has it factored in they will go ahead, but it could prove a bit of a mistake,” he said. (Reporting by David Milliken Editing by Alison Williams)

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