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Euro zone bond yields edged down on Friday, steadying after taking stock of the European Central Bank’s surprise decision to end bond purchases in the third quarter despite uncertainty around the Ukraine war.

The ECB’s decision, which also includes smaller bond purchases than previously announced under its conventional bond buying programme, the APP, had sent euro zone bond yields soaring on Thursday as investors had expected the bank to refrain from making commitments.

On Friday, bond yields across the bloc edged down but moves were marginal and yields stayed near Thursday’s highs.

Germany’s 10-year yield, the benchmark for the bloc, was down 1 basis point to 0.26% by 0803 GMT, after hitting a three-week high of 0.304% on Thursday which more than unwound the sharp fall seen in bond yields following Russia’s invasion of Ukraine.

Germany’s two-year yield, which is sensitive to interest rate expectations, was down 3 basis points to -0.43% after surging 14 basis points on Thursday.

Its five-year yield was down 2 basis points and back in negative territory after rising above 0% for the first time since Feb. 28 on Thursday.

Italy’s 10-year yield was down 1 bp to 1.91% after surging over 20 bps following the ECB meeting.

That kept the closely watched risk premium on Italian debt at 163 bps, compared to around 150 bps prior to the ECB’s policy decision.

Italy’s debt – a key beneficiary of ECB stimulus – was the worst hit in the bloc on Thursday and the sell-off in its debt came after a rally earlier in the week on the back of a report that the European Union may unveil joint debt sales to fund defence and energy spending related to the war in Ukraine.

“Bond markets are yearning for a white knight as many more billions have to be funded while the ECB is heading for the exit. The direction of travel seems clear,” said Christoph Rieger, head of rates and credit research at Commerzbank.

“Thinner liquidity may exacerbate the moves, but we don’t think that the re-pricing is yet completed.”

Italy will raise up to 7.75 billion euros ($8.51 billion)from an auction of bonds due 2024 2029 and 2037 on Friday.

With the ECB out of the way, focus was on an EU summit which was due to resume at 0900 GMT to tackle defence and energy spending issues.

Divisions have emerged over the possibility of new joint debt issuance, advocated by countries like France and Italy but opposed by Germany, the Netherlands and others.

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