May 17, 2019 / 12:56 PM / 9 months ago

UK gilt yields slide as PM May loses grip on power

LONDON (Reuters) - British government bond yields fell to their lowest level in six weeks on Friday as Prime Minister Theresa May’s weakening grip on power revived fears of a no-deal Brexit and prompted investors to buy low-risk government bonds.

The yield on the 10-year gilt, which moves inversely to the price, sank to 1.008 percent, its lowest level since April 2.

At 1242 GMT, it stood at 1.023 percent, down 5 basis points on the day.

The opposition Labour Party said it was giving up on talks to break the Brexit impasse in Britain’s parliament, blaming instability in May’s crumbling government. May agreed on Thursday to set out in early June a timetable for her departure.

Sarah Hewin, chief Europe economist at Standard Chartered, said the likelihood of a contest to replace May as leader of the Conservative Party meant new uncertainty about Brexit.

“It’s more of a matter of markets expecting whoever succeeds May is more likely to be a hard-line Brexiter,” she said.

Investors were also probably worried about the possibility of an early national election, Hewin added.

Some opinion polls have shown the opposition Labour Party, under its socialist leader Jeremy Corbyn, ahead of May’s Conservatives.

Writing by William Schomberg, additional reporting by Sujata Rao; Editing by Catherine Evans

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