UK gilt yields drop after last week's surge on Trump's tariffs

LONDON, April 14 (Reuters) - British long-dated government borrowing costs fell heavily on Monday after sharp increases in the previous sessions which were driven by worries about U.S. President Donald Trump's trade tariff onslaught.

Thirty-year gilt yields GB30YT=RR, which soared last week by the most since after Liz Truss's "mini-budget" in 2022, hit their lowest since April 8 at 5.378% and were down by 12 basis points at 5.395% at 1410 GMT, falling by more than U.S. bonds.

Equivalent German borrowing costs, which are less influenced by movements in U.S. Treasuries, were up marginally.

Financial markets around the world took some comfort from the White House's exemptions, for now at least, of smartphones and computers from U.S. tariffs.

Yields on two-year British gilts GB2YT=RR - which are sensitive to short-term speculation about official interest rates - were down by about 4 bps at 4.018%.

Investors were pricing roughly 75 bps of Bank of England rate cuts between now and the end of December - equivalent to three quarter-point reductions - little changed from Friday but down from more than 90 bps on Thursday.

Around 50 bps of cuts were expected before Trump's April 2 tariff announcements.

BoE interest rate-setter Megan Greene said on Saturday it was unclear what the tariffs would do to UK inflation and that the unpredictable behaviour of the dollar was adding to the puzzle for the British central bank.