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UK government debt sale attracts strongest demand since 2013

LONDON, July 7 (Reuters) - A sale of British government bonds generated the strongest demand from investors in more than three years, reflecting the rush for sovereign debt around the world since Britain's decision to leave the European Union.

The Debt Management Office said the bid-to-cover ratio at the auction on Thursday of 2.25 billion pounds ($2.93 billion) of 1.5 percent 2026 gilts was 2.33 times.

That was up sharply from 1.79 times at the previous auction of the same bond on May 5 and was the strongest bid-to-cover ratio for a conventional bond since January 2013.

Some auctions of index-linked bonds since then have generated stronger interest than 2.33 times.

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The 2026 bond sold at an average yield of 0.912 percent, down sharply from 1.656 percent when the bond was last sold two months ago.

Yields on bonds issued by rich nations around the world have sunk to record lows in recent days after the shock British referendum result triggered fresh concerns about the outlook for the global economy.

Gilt futures pared losses by around 30 ticks after Thursday's auction. The yield on 10-year gilts stood at 0.775 percent at 1039 GMT, broadly flat on the day and above a record low of 0.724 percent touched on Wednesday.

($1 = 0.7688 pounds) (Writing by William Schomberg; Editing by Catherine Evans)