	u k issues one billion stg bond tranche the bank of england said it was taking onto its books a further one billion stg tranche of pct treasury loan stock due payable stg pct on application the stock was issued to the bank at stg pct and will be available for dealings from march with the remainder of the amount payable on may the bank said the bonds would yield pct at the issue price and would be free of tax to residents overseas the issue would be designated pct treasury loan b a further mln stg was reserved for the national debt commissioners the market dropped by up to point following the bank s announcement with the treasury pct stock due quoted one full point lower at stg pct around minutes after the news dealers said the announcement had to be viewed against the backdrop of intense pressure for lower u k  rates which had built up over the past two weeks as a result of sterling s strength the bank this morning finally signalled it was prepared to see lower rates and u k clearing banks this afternoon announced cuts in their base lending rates to pct from pct the bank had initially been reluctant to countenance a rate cut because dealers said the authorities had wished to delay a reduction until around the time of the u k budget on march thereby preserving the full impact of chancellor of the exchequer nigel lawson s package of measures however in the face of sterling s apparently inexorable climb the authorities today decided to cede to pressure and allow a half point cut today s one billion stg tap issue was viewed by the market as a move by the bank to eradicate hopes for a further early rate cut which might arise as a result of strong sterling most market participants believe that lawson will now foster a further half point  rate reduction at the time of the budget although one or two said they would not be surprised to see a full point decline at this stage dealers noted that as part of the authorities attempts last week to ease pressure for lower rates the bank had issued a one billion stg tap stock with a view to subduing the government bond market to the surprise of most participants the issue was sold out within hours of becoming available for trading and the market pushed on to register further sharp gains dealers said that at this stage it seemed unlikely that the issue announced today would be absorbed by the market as rapidly as last week s however they noted that although sterling had edged down from its highs following the base rate cut it had still closed on a trade weighted basis at well ahead of friday s final and only just beneath the peak of touched at gmt reuter 
