LONDON - Investors sold British government bonds on Friday as they faced uncertainty about what the race to become the next UK prime minister could mean for attempts by finance minister Jeremy Hunt to restore the country's fiscal credibility.

Yields on 2-, 5-, 10- and 20-year gilts rose more strongly than those of equivalent German and U.S. government bonds, hitting their highest levels since Monday.

That was when new finance minister Hunt announced he would reverse most of the tax cuts planned by Prime Minister Liz Truss. Truss announced her resignation on Thursday after six chaotic weeks.

Antoine Bouvet, senior rates strategist at ING, said the possibility of an early national election was being priced into British government bonds although that was not his base case.

"A secondary concern relates to the budget," Bouvet said. "There is no guarantee that the new PM will wholeheartedly back the fiscal measures announced by Hunt this week, or is about to unveil on Oct. 31, especially if they prove unpopular."

Investors were also unsettled by the risk of a delay to the Oct. 31 announcement by Hunt that could mean his plans for a tighter grip on public spending are not factored into the Bank of England's next interest rate decision, he said.

The central bank is expected to announce its latest move on rates on Nov. 3 with investors putting an 80% chance on a 75 basis-point increase in Bank Rate to 3.0%.

Truss's resignation announcement on Thursday kicked off a new race to lead the ruling Conservative Party. Former prime minister Boris Johnson and his former finance minister Rishi Sunak were seen as leading potential contenders on Friday.

"Whilst the resignation of Truss is what markets were hoping for, we now have the possibility that Boris Johnson could return as prime minister which is causing some jitters," Dan Boardman-Weston, CEO and Chief Investment Officer at BRI Wealth Management, said.

He also said there were questions about whether Hunt would remain as finance minister under Britain's next leader.

(Reporting by William Schomberg; Editing by Alison Williams, Gareth Jones and Emelia Sithole-Matarise)