Allianz Global Investors bought long-dated UK gilts during Iran selloff

LONDON, March 10 (Reuters) - Allianz Global Investors added to a position favouring longer-dated UK government bonds last week, betting that the Bank of England will still cut rates this year.

UK government bonds have been among the worst hit by a global bonds selloff following the U.S.-Israeli war with Iran that has sent yields sharply higher as investors price in the risk of higher inflation and slash rate cut bets.

Ranjiv Mann, a senior portfolio manager at the firm, told Reuters he added to a position favouring 30-year British bonds, known as gilts, relative to U.S. Treasuries late last week.

"Clearly, in the short term, markets are questioning some of that (Bank of England rates) pricing, but we think the underlying backdrop still remains supportive for gilts relative to other markets," Mann said, citing a weakening labour market, easing inflation before the war and tight fiscal policy.

Investors' Bank of England rate cut bets have whipsawed. Traders priced in a high chance of a rate hike this year on Monday as oil soared, having previously expected a rate cut this month. On Tuesday they saw around a 50% of a cut by year-end. (Reporting by Yoruk Bahceli; editing by Dhara Ranasinghe)