By Keith Jenkins March 5 (Bloomberg) -- Gilts fell and the pound strengthened against the euro and yen after a report showed the U.S. lost fewer jobs last month than economists predicted, stoking optimism the global economic recovery is gathering pace. The U.S. Labor Department said employers eliminated 36,000 jobs in February after a reduction of 20,000 in January. The median estimate of 82 economists in a Bloomberg survey was for a decrease of 68,000 jobs. “The jobs data were quite strong,” said Jason Simpson, a U.K. interest-rate strategist at Royal Bank of Scotland Group Plc in London. “Gilts took a bit of a beating after the numbers.” Gilts’ decline pushed the 10-year yield up 3 basis points to 4.03 percent. The 3.75 percent security due September 2019 fell 0.21, or 2.1 pounds per 1,000-pound ($1,503) face amount, to 97.81. The two-year yield also rose 3 basis points, to 1.08 percent. Sterling gained 1.3 percent to 135.55 yen, up from 133.81 yesterday, as of 2.01 p.m. in London. The U.S. unemployment rate remained at 9.7 percent. Mansoor Mohi-uddin, chief currency strategist at UBS in Singapore, yesterday recommended foreign-exchange traders buy sterling if they want to bet on a stronger global economy. The U.K. currency appreciated 0.1 percent to 90.21 pence per euro, from 90.33 pence yesterday. Sterling was little changed versus the dollar at $1.5033, from $1.5032 yesterday. It earlier fell as much as 0.3 percent to $1.4994. Sterling had slumped this year as opinion polls stoked concern that British voters will elect a minority government too weak to cut the nation’s budget deficit. The pound has lost 8 percent against the dollar in 2010, and reached $1.4784 on March 1, the lowest since May 1. ‘Washed Around’ “Sterling is being washed around in the wake of the U.S. payrolls data,” said Adam Cole, head of global currency strategy at RBC Capital Markets in London. “More generally, the panic over the political situation in the U.K. is fading a little bit,” which has encouraged some market participants to unwind bets the currency would fall, Cole said. The Bank of England yesterday held its bond-purchase program at 200 billion pounds ($301 billion) as officials gauged the strength of prices in the economy after the deepest recession on record. The market is pricing a higher yield on AAA-rated 10-year U.K. debt than that of the equivalent maturity interest rate swap, according to Richard McGuire, a senior fixed-income strategist at Royal Bank of Canada Capital Markets. That’s because investors are concerned the possible end of the bond- buying program will mean there may not be enough buyers for gilts, he said. “It reflects supply concerns and the pausing of the QE program,” he said. The benchmark 10-year gilt yield is about 15 basis points more than the equivalent maturity sterling swap rate, he said. --Editors: Keith Campbell, Michael Shanahan. To contact the reporter on this story: Keith Jenkins in London at Kjenkins3@bloomberg.net To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net Related Articles

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