The German Bund future was 12 ticks higher on the day at 125.60 after hitting its lowest in almost three weeks in the previous session.

Greece's parliament passed through key austerity measures this week which is likely to secure it more international aid and enable the heavily-indebted country to avoid immediate bankruptcy.

But uncertainty remains over the country's ability to get its budget deficit under control and to avoid a default down the line.

"They can pass whatever they want but they can't implement it," said a trader in London. "It's not a massive game-changer in the bigger picture."

With relief from Greece in the near-term horizon, investor attention would likely fall back to fundamentals as they try to assess the health of the world economy.

US data on Thursday offered investors a glimmer of hope, showing acceleration in factory activity in the US Midwest but China's factory output grew at its slowest pace in 28 months in June.

Both the euro zone and the United States release manufacturing data later in the session.

Focus was also shifting to the European Central Bank's monetary policy meeting on Thursday. The ECB is widely expected to raise interest rates but investors will look to the press conference for any clues into the rate outlook going forward.

"They might step back from the hawkish line for a bit," the trader added.

Copyright Reuters, 2011