By Kirsten Donovan
LONDON, Nov 2 (Reuters) - German government bonds rallied on Monday, tracking UK gilts after data showed activity growth in the UK construction sector slowed more than expected, raising concerns Britain's GDP growth could slow.
But volumes were thin ahead of a Federal Reserve meeting starting later in the day and peripherals came under renewed pressure, with Greece underperforming and the Irish 10-year yield spread creeping to a new high over Bunds as investors were reminded of peripheral euro zone debt concerns.
"We are seeing a general flight to quality with investors deciding that before the conclusion on Wednesday of the Federal Reserve's meeting it is best to keep your assets in higher quality (paper)," a dealer in London said.
The Fed was expected to announce a new Treasury purchase programme to stimulate the economy after the two-day meeting ends on Wednesday, with markets pricing in asset purchases of about $100 billion a month for five months and an open mandate...
