The German Bund was down 13 ticks on the day at 135.50, having fallen 2.2 percent last week -- its biggest weekly loss since 2001.

"I think there are a few things you can argue are bond supportive out there potentially, the Dutch budget .... the Spanish deficit obviously is very much in the spotlight, Italy's labor-standoff," said a trader. "But at the moment the poor technical outlook has tended to be very dominant."

Italian Prime Minister Mario Monti set a collision course with the country's biggest trade union after talks on a historic reform to employment protection law failed to produce a deal.

Meanwhile, state think tank CPB said on Tuesday the Netherlands is in the same fiscal boat as the leading peripheral euro zone states it has criticised for missing budget targets, and it needs spending cuts and structural reforms to revive a slumping economy.

The trader said he would look to buy German bonds again when 10-year yields reached 2.10 percent. They were currently yielding 2.05 percent.

UBS said in a research note Bunds were bearish while they traded below the 136.72 retracement level.