A currency crisis in Turkey has sparked a global market selloff in recent days, and investors have instead retreated to safe havens such as German debt, considered one of the safest and most liquid assets in the world.

The United States warned Turkey on Thursday to expect more economic sanctions unless it hands over detained American pastor Andrew Brunson, as relations between the two countries took a further turn for the worse.

Accordingly, Germany's 10-year government bond dipped as low as 0.287 percent on Friday, its lowest in nearly a month and half what it was just three months ago.

"It is remarkable how low Bund yields are right now, and of course this has to do with the safe haven flows but you also have to take into account Bunds are very scarce right now," said BBVA strategist Jaime Costero Denche.

"US Treasuries are also a safe haven asset but in the case of Bunds, the European Central Bank is still taking out some of the supply which is possibly exaggerating the flight to quality move."

Turkish bonds and the lira had found some support on Thursday after Finance Minister Berat Albayrak assured international investors on a conference call that the country would emerge stronger from its currency crisis and that its banks were healthy.

But that changed quickly on Friday, with the Turkish lira dropping another 7 percent at one stage.

Italian bonds have been hit particularly hard by the Turkish currency crisis, in part because of concerns over Italian banks' exposure to the country. Italian 10-year yields were higher 3 basis points on the day and the spread over Germany widening to 284 bps.

However, Spanish and Portuguese government bonds held firm, with yields more or less unchanged on the day.,

"Investors are sensitive to the headline risk that might come over the weekend," said Commerzbank strategist Michael Leister, saying that many investors may buy German bonds just to avoid being exposed to risk over the weekend.