Gilts

Yields on two-year British gilts bobbed near a record low as the prospect of further hefty rate cuts overshadowed worries about mounting gilt issues to finance government borrowing. Two-year gilt yields eased to 2.1 per cent. The December long gilt future fell 32 ticks at 114.72, underperforming the equivalent bund future.

Rumour of the day

BAE Systems fell 24¼p to 337½p amid reports that the Ministry of Defence had frozen orders for next-generation equipment, such as the RAF’s Joint Strike Fighter F35 jets and a new design of armoured vehicle for the Army. BAE is heavily involved in both programmes. The MoD is prioritising spending on supporting existing operations.

Deal of the day

RCG Holdings, a Hong Kong-based maker of radio identity tags, paid £18 million to raise its stake in Vast Base, a Chinese provider of automated ticketing systems for stadiums, from 60 per cent to 80 per cent. It rose ¾p to 43p as it said that demand in China was steady despite the credit crunch. Investec, the house broker, kept its “buy” rating.

Bet of the day

George Osborne has been blamed for stoking a run on sterling, but will the slide against the dollar continue? After trading at $2 in the summer, the pound fell to a six-year low of $1.4560 last week, then rallied yesterday to above $1.50. Spreadex has a December-based cable spread-betting contract with a spread of $1.4910-$1.4918.

Tiddler to watch

Shares in Hansen Transmissions, a wind turbine gearbox maker, fell 1¾p to 99p, despite Morgan Stanley cutting its price target from 310p to 210p but raising it to “overweight”. Shares have fallen from 280p in two months after Vestas and Gamesa, two customers, cut production. Morgan Stanley thinks that Hansen should outperform the sector.

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