Focus remained on the fund on Thursday and Italy's bonds remained near those levels.
The 10-year yield was las
The EU proposed on Wednesday a 750 billion euro recovery fund, which would offer 500 billion euros in grants and 250 billion euros in loans to help its coronavirus-hit economies recover.
The news boosted Southern European bonds - and Italian debt in particular - supported by the possibility of receiving grants that will ease pressure on Italy's own hefty debt pile, pushing 10-year yields to eight-week lows.
Focus remained on the fund on Thursday and Italy's bonds remained near those levels.
The 10-year yield was last up 2 basis point to 1.51pc, just off the eight-week lows at 1.46pc.
"With the release now of the European Commission's plan for COVID recovery, we see there being room for further positivity in Eurozone risk assets, even while the global sentiment is buffeted by China-related tensions," Mizuho analysts told clients.
"This feeds directly into our expectations for European risk assets to outperform , which will be further helped by a likely expansion of ECB QE next week."
Markets largely expect the European Central Bank to increase the size of its bond purchases at its meeting on June 4.
French Finance Minister Bruno Le Maire said on Thursday that he hoped the European Union could reach a deal on the Commission's proposed recovery fund in the coming weeks.
Austria said on Wednesday that the EU's proposal is a starting point for negotiations, but repeated a preference for loans.
Germany's 10-year benchmark yield was up 2 basis points at -0.40pc, ahead of national inflation figures due at 1200 GMT.
These will be watched ahead of the EU-wide inflation release on Friday - a key factor guiding thinking on next week's ECB meeting. EU-wide sentiment indicators are also due on Thursday.
The German economy is likely to shrink by 6.6pc this year as a consequence of the coronavirus crisis before growing by 10.2pc in 2021, the Ifo Institute said on Thursday.