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UK gilt yields hit 8-day high, helped by upbeat euro zone data

LONDON, Oct 24 (Reuters) - British government bond yields rose to an eight-day high on Tuesday, after positive economic news from the euro zone put downward pressure on prices.

The 10-year gilt yield hit 1.366 percent at 1237

GMT, its highest since Oct. 16, before easing back to 1.356 percent towards the close of trade, leaving it up 4 basis points on the day. Strong business and lending surveys from the euro zone provided more evidence that the European Central Bank will announce a trimming of its monthly bond purchases at its Thursday meeting, pushing bond yields in Europe higher.

The yield spread between 10-year British and German bonds was little changed at around 88 basis points. With no domestic economic news on Tuesday that would sway Bank of England officials meeting to set interest rates next

week, British interest rate futures were little changed

on the day for the 2017 and 2018 contracts. "Gilts made losses on a quiet day for new UK economic data releases," Daiwa fixed income strategist Mantas Vanagas wrote in a note to clients. The first official preliminary estimate of British third-quarter GDP will be revealed on Wednesday, which a Reuters poll suggests will hold at the previous quarter's tepid growth rate of 0.3 percent. "This might nevertheless prove sufficiently strong to persuade a majority of MPC members to vote for a hike in Bank Rate," Vanagas said. Separately, Britain sold 650 million pounds ($853 million)

of a 0.625 percent index-linked gilt due in 2042 .

The sale attracted fairly solid demand with orders worth 2.37 times the amount on offer, although it marked the smallest bid-to-cover ratio for any linker auction since May 23. ($1 = 0.7619 pounds)

Dec long gilt future 124.14 (-0.47) Dec 2017 short sterling 99.475 (-0.005) March 2018 short sterling 99.35 (-0.01) 10-year gilt yield 1.36 pct (+4.4 bps)

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(Editing by Pritha Sarkar)