The December gilt future settled 15 ticks lower at 118.99, while its German counterpart was 3 ticks higher.

The spread between 10-year gilt yields and equivalent Bund yields was 2 basis points wider at 41 points, also wider than at the beginning of the week when it hovered around 33-34 points.

"(The) widening against Bunds has been down to any lingering expectations of QE being factored out," said Lloyds strategist Eric Wand.

Many economists have revised their forecasts for quantitative easing asset purchases, predicting no further monetary stimulus from the central bank for now, after data last week showed the British economy grew 1 percent in the third quarter.

"The market will still have a small amount priced in to hedge against the risk that they do extend QE, but the market is generally coming around to the view that it's not going to be the case come November," Wand said.

Comments from BoE Deputy Governor Charlie Bean late on Wednesday, signalling a possible end to bond buying, added to the pressure on gilts.

Concerns about the outlook for demand are crimping spending and investment, reducing the benefit of QE to Britain's economy, Bean said.

"It appears that he is increasingly reluctant to provide further stimulus," Barclays strategists wrote in a note. "In addition, he appears concerned that by loosening further the necessary adjustments in the economy could be delayed."

Gilts shrugged off weak British manufacturing PMI data, which painted a gloomier picture of the economy's health.

The downturn in manufacturing worsened in October as companies received fewer orders and costs rose at a faster pace, a survey showed.

Meanwhile, Britain's Debt Management Office sold 900 million pounds of index-linked gilts maturing in 2047, receiving a cover of 1.75 times.

"The actual striking price of the auction was lower than the prevailing market price and I think that was a reflection of people not willing to desperately chase it," Wand said.

Early on Friday, investors will look to British construction PMI data due at 0930 GMT, while later in the day attention will turn to US non-farm payrolls.

"There's appetite to take on a lot of risk ... so tomorrow's payrolls will be a key focal point for not only the US but for global bond markets as well," Wand said.

Ten-year gilt yields rose 2.5 basis points to 1.878 percent.