UK gilts claw back some of their losses as high yields attract buyers

LONDON, May 18 (Reuters) - British government bond prices ​recovered some ⁠of their recent heavy ​losses on Monday as some investors were tempted back into the market by historically high ​returns, ‌despite worries about the future of Prime Minister Keir Starmer.

Ten-year British government ⁠bonds recorded their sharpest daily loss in ⁠more than a year on ​Friday, in part due to worries about Andy Burnham, the left-wing mayor of Greater Manchester, who is likely to challenge Starmer

On Monday 10-year ​yields ‌briefly set a fresh post-2008 high at 5.199% at 0724 GMT according to LSEG data, pushing past Friday's peak of 5.187%, but then fell steadily and were down by 7.5 basis points at ​5.105% at 1413 GMT after leaping by 18 bps on Friday.

Anna Macdonald, investment strategy ​director at investment platform firm Hargreaves Lansdown, said she was not surprised that UK bonds ‌were outperforming on the day.

"There are definitely some clients dipping their toes back in because yields are pretty attractive," Macdonald said.

While the ⁠lack of ⁠clarity over who will lead the ‌Labour Party was likely to take weeks to be resolved, it was possible that the Iran ​war could ​end before long which would bring down yields ‌on bonds globally, she said.

Yields on two-year gilts were down by around 7 bps, as were those on 30-year British government bonds . (Writing by William Schomberg; editing by David Milliken)