Yields on 10-year Italian government bonds fell 10 basis points to 4.84 percent, while the equivalent Spanish yield fell 9.9 bps to 5.02 percent.

Five-year Italian and Spanish bond yields also fell one day after major banks and pension funds threw their weight behind Greece's bond swap offer to private creditors (PSI) on Wednesday . But Bund futures were little changed on the day showing investors were still cautious.