April 16, 2012 / 1:12 PM / 6 years ago

Gilts slide into red after strong retail sales

LONDON (Reuters) - British gilt futures fell into negative territory and hit a session low on Monday after data showing retail sales rose more than twice as much as expected in March sparked hopes that the economy slowed less than feared in the first quarter.

Official data showed retail sales rose 0.8 percent in March, slightly down from 1 percent growth in February, but well above expectations for a rise of just 0.3 percent.

Equity markets climbed after the data.

“The retail sales data were very strong, and equities are liking it. The market had got itself into a quite a pessimistic place last week, so the risks were we’d get positive data at some point,” said a London-based trader.

At 9:03 a.m. EDT (1303 GMT), the June gilt future was 26 ticks down at 116.08, in line with the equivalent Bund, and having hit a session low of 116.06. The contract had traded around 4 ticks higher at 116.38 before the data.

In the cash market, the yield on ten-year gilts was 1 basis point up at 2.05 percent, having traded 1 basis point down at 2.03 percent earlier in the day.

Reporting by Fiona Shaikh

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