Traders fear a new left-leaning U.K. government led by Andy Burnham would challenge the country's fiscal discipline.

The yield on 30-year UK government bonds surged back up close to 28-year highs and the pound was down as much as 0.4 per cent against the US dollar amid political turmoil.

Bond vigilantes also sold gilts en masse, with UK government bond yields rising due to Andy Burnham's announcement.