An improving US labour market and speculation that the US Federal Reserve could soon start to unwind its bond buying stimulus has pushed up US and European bond yields
Inflation in the 19 countries sharing the euro slipped to 1.9% in June from 2.0% in May, in line with forecasts in a Reuters poll and right on the ECB's target of "below but close to 2%".
IHS Markit's flash Composite PMI Index, seen as a good guide to economic health, rose to 53.7 from March's 53.2, confounding expectations in a Reuters poll for a dip to 52.8.
Germany's 10-year government bond yield, the benchmark of the euro area, fell 1 basis point at -0.27%.
Euro zone bond yields, which had been rising in line with US Treasury yields on hopes for a strong economic recovery later this year and increased inflation, dropped 1-3 basis points.
"The global picture is that the manufacturing sector is in rude health and is the sector that is leading the recovery, so perhaps there's a bit of a reaction to that," said ING rates strategist Antoine Bouvet.
Germany's benchmark 10-year Bund yield was at -0.305%, little changed on the day at 1154 GMT. The yield peaked at a one-year high of -0.203% on Feb. 26 and has since stabilised below this level.
A market gauge of long-term euro zone inflation expectations rose above 1.50% for the first time since March 2019.
