European government bonds partially recovered from Wednesday's losses as a slight dip in oil prices led traders to scale back their bets on central bank interest rate hikes.
The yield on the UK 2-year gilt fell by 8 basis points to 4.25%, following a 16 basis point increase at Wednesday's close.
Interest rate swaps indicate traders now expect the Bank of England to implement 31 basis points of rate hikes this year, down from a previous expectation of 38 basis points.
The yield on the German 2-year Schatz dropped by 6 basis points to 2.65%, after rising 12 basis points at the end of the previous session.
Swaps pricing shows traders anticipate the European Central Bank will raise rates by 34 basis points this year, a reduction from the prior forecast of 40 basis points.
Brent crude oil traded around $77 per barrel, having climbed above $80 on Wednesday. Market expectations that energy shipping will resume its recent recovery were fueled by the limited scope of a new round of US strikes against Iran.
Market Snapshot
The yield on the 10-year German Bund declined by 1 basis point to 3.09%.
German bund futures advanced by 28 ticks to 125.42%.
The yield on the 10-year Italian BTP fell by 7 basis points to 3.84%.
The spread between Italian and German 10-year bond yields narrowed by 6 basis points to 75 basis points.
The yield on the 10-year French OAT decreased by 7 basis points to 3.86%.
The yield on the 10-year UK gilt dropped by 7 basis points to 4.90%.
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