Europe's government bond yields dropped on Friday ahead of a crucial bond sale by Italy and after the U.S.central bank confirmed its cautious view on further monetary policy.
A rebound in Asian shares overnight did not led to a selling in core rates on Friday and major part of euro area bond yields opened nearly one basis point lower in morning deals.
The latest reports about trade negotiations between the U.S. and China supported European shares but bond market investors remain cautious over the U.S. government shutdown and the UK’s Brexit vote next week.
Germany's government bond yields slipped almost one basis point across the curve with the 10-year government bond yield at 0.185 percent, not far off two-year trough touched last week.
All eyes are now on Italian auctions as the nation is on track to sell up to 6.5 billion euros of three, seven and 30-year BTPs.