China is diversifying its foreign exchange reserves in order to safeguard their value, the country's currency regulator said on Thursday, while dismissing a media report about its purchases of US debt.

The Bloomberg News story published Wednesday lifted yields on the 10-year government bond to a 10-month high as traders sold off their holdings.

Despite the selloff, some analysts had their doubts about the story, citing China's ability to extricate itself from the market and the dearth of good investments in the global low-rate environment.

"It didn't seem to make a whole lot of intuitive sense to us that the biggest holder of Treasuries, excluding the Fed, would say that they're not buying," said Gennadiy Goldberg, interest rates strategist at TD Securities in New York.

He continued, "To some extent it does suggest that the market is very jittery about potential sources of demand."

Though yields were lower on Thursday morning, they did not reverse all of the gains made Wednesday, remaining near their highest level since March 2017.

Hawkish European Central Bank (ECB) minutes helped bring yields off their lows. The ECB said it should revisit its policy message in early 2018 and gradually adjust its language to reflect improved growth prospects, the minutes showed.

Nervousness about reduced central bank accommodation put pressure on bonds this week, after the Bank of Japan said on Tuesday it will trim its purchases of Japanese government bonds.

Investors are next focused on Friday's Consumer Price Index. "Inflation is the lynchpin for the global outlook this year," said Goldberg.

With inflation still well below the Federal Reserve's 2-percent target, investors are watching for any sign of a pick up.

Bond yields fell slightly on Thursday after data showed US producer prices fell for the first time in nearly 1-1/2 years in December amid declining costs for services.

The market will also be watching for remarks about inflation in a speech by William Dudley, president of the New York Fed, at 3:30 p.m. ET (2030 GMT).

At 9:30 a.m. ET (1330 GMT), 10-year yields were 2.559 percent, down from the high of 2.597 percent hit Wednesday, the highest level since March 15.