LONDON: The yield on Germany's 10-year government bonds fell to a one-month low on Friday after US cruise missile strikes on a Syrian airbase prompted a rush into safe-haven assets.
Ten-year yields, which move inversely to the cash price, were down 2.5 basis points at 0.234 percent.
The escalation of the US military role in Syria drew sharp criticism from Russia and the immediate prospect of increasing diplomatic tensions also sent US Treasury yields to their lowest for more than four months. Ten-year yields were at 2.29 percent and most high-rated euro zone bond yields fell 1 basis points (bps) to 2 bps in early Friday trading.
"Safe-haven flows are always affected by political events, and when it affects countries where the US and Russia are interested, then investors become even more nervous because of relations (between those two)," DZ Bank strategist Daniel Lenz said.
"Especially now you also have talks between the US and China on North Korea," he said.
Oil prices hit a one-month high of $56.08 a barrel and European stocks dipped, with the pan-European STOXX 600 index down 0.3 and basic resource stocks down one percent. All but two sectors were down on the day.
German government bond futures were up 27 bps, at their highest since March 8, just after the market opened.
The US jobs report - due out at 1330 GMT - could influence bond markets, since it has implications for the future of monetary policy and for inflation prospects in the world's richest country.
Expectations are for an increase of 180,000 in non-farm payroll numbers, according to a Reuters poll, so any result on either side of that number could move markets.
Elsewhere, Greece and its euro zone creditors agreed on major elements of reforms needed to unlock new loans, with a total of 2 percent of GDP of measures to be implemented in 2019 and 2020, the head of euro zone finance ministers said.
The yield on Greece's short-dated bonds maturing in April 2019 dropped 23 bps to 7.70 percent.
Later on Friday, ratings agency S&P Global is to review France's credit rating, now AA with a stable outlook.
"I am not expecting any change, but there may be some hint on what S&P could do if (Marine) Le Pen wins the presidential elections, what implications it could have regarding the rating," said Lenz.
Far-right leader Marine Le Pen has promised to try to take France out of the single currency if she wins the two-round presidential elections scheduled for April 23 and May 7.
The yield on France's 10-year government bond fell 2 bps to a one-month low of 0.88 percent.
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