Bonds: Gilts track Japanese bonds and German Bunds higher

These were the movements in the most widely-followed 10-year sovereign bond yields:

US: 1.85% (+0bp)

UK: 1.53% (-1bp)

Germany: 0.28% (-3bp)

France: 0.61% (-4bp)

Italy: 1.44% (-5bp)

Spain: 1.55% (-4bp)

Portugal: 2.93% (-5bp)

Japan: 0.07% (-2bp)

Portugal: 2.93% (-5bp)

Sovereign bonds diverged on Wednesday, with Gilts and US Treasuries little changed ahead of Thursday´s meeting of the Monetary Policy Committee and Friday´s all-important US jobs report.

German debt advanced after demand from investors at an auction of five-year notes on Wednesday failed to meet the supply on offer.

Berlin received bids of €4.75bn for the €5bn of debt instruments on sale. On the previous day, the yield on those five-year notes dropped beneath the European Central Bank´s 0.3% deposit rate for the first time ever.

In parallel, the yield on the 30-year Bund dropped below 1.0% for the first time since May 2015. Earlier in the day, the yield on similarly-dated Japanese government bonds had hit an intra-day low of 0.045% - its lowest-ever level among G7 countries.

Acting as a backdrop, on Wednesday the President of the Federal Reserve bank of New York, William Dudley, told Market News International that the Fed would need to take into account the tightening in financial conditions since December, if it continued into March, when setting policy.

Dudley´s remarks came as the ISM´s US service sector purchasing managers´ index for January dropped from a revised reading of 55.8 for December to 53.5 (consensus: 55.1) - its lowest since October 2013.

On 2 February, ECB governing council member Yves Mersch told the Wall Street Journal all policy tools were "on the table" but warned that officials would not be tied down by investors´ expectations.