U.K. gilts advanced, with 10-year yields falling the most in a week, as investors sought safer assets amid concern Greece’s efforts to secure a second aid package are faltering. The pound strengthened for the first time in four days against the euro as Greek officials prepared to respond to international creditor demands for economic measures and further spending cuts. U.K. house prices rose for the first time in three months in January, according to Halifax. The 10-year gilt yield fell five basis points to 2.13 percent at 9:13 a.m. London time. The 3.75 percent bond due September 2021 rose 0.48, or 4.80 pounds per 1,000-pound ($1,574) face amount to 114.005. Two-year yields declined three basis points to 0.39 percent. Gilts have handed investors a loss of 1.5 percent this year, lagging German government bonds, which lost 0.5 percent, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. The pound appreciated 0.5 percent to 82.79 pence per euro, and dropped 0.4 percent to $1.5746. Sterling has declined 0.8 percent this year according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar declined 2.3 percent, and the euro dropped 1.6 percent. U.K. home prices increased 0.6 percent in January from December to an average 160,907 pounds, the mortgage unit of Lloyds Banking Group Plc said in London today. From a year earlier, values dropped 1.7 percent. The Treasury plans to auction 4 billion pounds of bonds due 2017 tomorrow, as well as 3.5 billion pounds of 28-, 91- and 128-day bills on Feb. 10. To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

Source