U.K. gilts rose, with 10-year bonds gaining for a fourth day, as investors favored safer assets before European Union leaders meet today for their first summit of 2012 amid concern the region’s growth is slowing. Gilts outperformed German bunds on speculation the struggle to complete a Greek debt-swap plan will deter efforts to resolve the financial crisis. The pound weakened for the first time in five days against the dollar after property researcher Hometrack Ltd. said U.K. home prices stalled last month and remain under “downward pressure.� “There’s a bit of a move toward the safe havens again,� said Elisabeth Afseth, a fixed-income analyst at Investec Capital Markets in London. “The repeated lack of political consensus within the euro area is quite worrying. Obviously that’s much more of a worry for the peripherals than it is for the core Europeans, and then even less so for outside of the euro zone, and that’s why the U.K. is benefitting.� The 10-year gilt yield fell five basis points, or 0.05 percentage point, to 2.02 percent at 10:36 a.m. London time after dropping to 2 percent, the lowest since Jan. 19. The 3.75 percent bond due September 2021 rose 0.445, or 4.45 pounds per 1,000-pound ($1,567) face amount, to 115.025. Two-year yields dropped three basis points to 0.36 percent. The extra yield investors demand to hold 10-year gilts instead of similar-maturity German bunds fell two basis points to 19 basis points. EU chiefs arrive in Brussels about 2 p.m. to put the finishing touches on a German-led deficit-control treaty and endorse the statutes of a 500 billion-euro ($661 billion) rescue fund to be set up this year. Gilt Returns Gilts have handed investors a 0.5 percent loss this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German government bonds declined 0.4 percent. The U.K. plans to auction as much as 7.25 billion pounds of debt this week, starting with a 2.5 billion pound sale of notes maturing in 2025 on Feb. 1. The pound declined 0.3 percent to $1.5678, paring this month’s advance to 0.9 percent. Sterling dropped 0.3 percent to 120.23 yen, and climbed 0.4 percent to 83.76 pence per euro. Home prices were unchanged in January, London-based Hometrack said in an e-mailed report. From a year earlier they fell 1.6 percent. The underlying trend is one of “tightening supply and weakening demand,� the company said. Sterling has depreciated 1 percent in January, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar declined 2 percent, and the euro dropped 0.6 percent. To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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