Yield on UK five-year government bonds falls to new record low

FILE PHOTO: Daffodils are seen flowering near the Treasury building in London, Britain March 7, 2017. REUTERS/Toby Melville/File Photo

LONDON (Reuters) - The yield on five-year British government bonds fell to a record low just above zero on Thursday as investors priced in the possibility of negative interest rates by the Bank of England.

The yield on the five-year gilt GB5YT=RR was down about five basis points on the day at 0.006% shortly after 1345 GMT.

Britain's debt office tapped into strong demand from investors earlier on Thursday at an auction of 2 billion pounds ($2.45 billion) of 12-year gilts GB12YT=RR.

At an auction on Wednesday, Britain sold its first bond with a negative yield.

Reporting by William Schomberg, editing by David Milliken