Washington on Tuesday set visa restrictions on Chinese officials for the detention or abuse of Muslim minorities and widened its trade blacklist to include some of China's top artificial-intelligence startups.
A U.S. official said high-level trade talks would still take place on Thursday and Friday as planned.
The news came after eight Chinese technology companies were blacklisted and U.S. President Donald Trump said on Monday a quick deal to end the trade dispute was unlikely.
Ten-year bond yields across the euro zone were up 1 to 2 basis points.
"There's been so much negative news and mixed headlines ... If you wrap these together and (you know that) global growth is heading one way, you then see the market reposition and try to take some profit off the news," said Matthew Cairns, fixed income strategist at Rabobank.
The trade war is a key risk to global growth. Bond yields typically fall on lowered growth and inflation expectations.
"You take profit and yields move higher, then you head back in because you're pretty confident that we're going to go lower anyway," Cairns added.
Issuance is in focus. Italy is due to price its first dollar bond in nine years and Portugal will hold an auction after its bonds hit five-week lows on Monday following a weekend election and a rating upgrade from agency DBRS.
Italy is selling five-, 10- and 30-year bonds via a syndicate of banks, with pricing due on Wednesday, while Portugal is expected to offer up to 1 billion euros ($1.1 billion) of 2034, bonds in an auction on Wednesday.
Meanwhile, German Finance Minister Olaf Scholz on Wednesday indicated he was in favour of a woman succeeding German board member Sabine Lautenschlaeger at the European Central Bank.
Investors will also eye the minutes of the Federal Reserve's September meeting due for release later on Wednesday.
Focus is on the U.S. central bank's next policy decision as Chair Jerome Powell flagged openness to further rate cuts and said the Fed would expand its balance sheet to ensure money markets functioned smoothly.