Signals emerging from US-Iran peace negotiations were mixed, energy prices pared their declines, and the German government bond yield curve bear-steepened.
The UK gilt yield curve also bear-steepened, ending its longest winning streak since June.
Money market bets on European Central Bank rates were largely unchanged, with traders pricing in a 22 basis point hike in December and a cumulative 63 basis points of tightening by the end of next year.
However, traders increased their wagers on Bank of England tightening next year, expecting a cumulative 105 basis points of hikes by the end of 2027.
One trader bought an options strategy linked to SONIA futures, betting that money markets will price in one Bank of England rate hike by the end of the first quarter of next year.
Market levels: German government bond yields rose 3 basis points to 3.32%; German government bond futures fell 15 ticks to 122.50; Italian 10-year government bond yields rose 3 basis points to 4.45%; French 10-year government bond yields rose 4 basis points to 4.94%; 10-year UK gilt yields rose 7 basis points to 5.2%.
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