Euro zone bond yields were little changed on Thursday as oil prices steadied and U.S. inflation data cooled expectations for a rate hike from the Federal Reserve next month.
Germany's 10-year yield, the benchmark for the euro zone, was little changed at 3.157%, within its recent range.
Investors had turned their focus to Wednesday's U.S. consumer price inflation data which showed benign underlying price pressures, prompting markets to reduce the chances of an interest rate hike from the Fed.
Financial markets were pricing in a roughly 35% chance of a rate increase at the Fed's September 15 to 16 policy meeting, down from about 50% on Tuesday.
The data is closely watched, given the size of the U.S. economy and the influence of the Fed on other central banks and global markets.
"The U.S. CPI figures released yesterday came in largely in line with expectations, providing a bit of relief for fixed income markets," said Jens N198rvig Pedersen, director, FX and rates strategy at Danske Bank.
U.S. producer prices data released later on Thursday will provide another readout on the U.S. inflation picture and be closely watched by markets.
EYES ON ENERGY
Investors are still watching discussions between Washington, Tehran and mediators on any end to the Iran war and the potential reopening of the Strait of Hormuz, although a deal appears to be out of reach with attacks on ships occurring this week and both sides stepping up their rhetoric.
The stalemate is keeping oil prices steady although elevated oil prices since the start of the war have prompted investors to bet that the ECB will continue to raise rates after a rate hike in June.
Markets are pricing in around a 90% chance of a quarter-point rate hike at next month's meeting.
Germany's two-year yield, which is sensitive to changes in interest rate expectations, was up about 1 basis point at 2.781%.
