Global stock markets, hurt on Thursday after the arrest of the chief financial officer of Chinese smartphone-maker Huawei in Canada fanned fears about world trade tensions, were modestly firmer on Friday.
Oil prices also recovered from heavy losses the previous session, jumping more than 5 percent as big Middle East producers in OPEC agreed to reduce output to drain global fuel inventories and support the market.
That sparked selling of higher-rated government bonds, while lower-rated Italian debt markets benefited from a recovery in risk assets.
"What we're seeing today is a reversal of yesterday's move," said Jan von Gerich, chief analyst at Nordea.
"The OPEC decision has also removed some uncertainty."
That followed a five bps fall on Thursday, the biggest daily drop in over two months. The move also comes ahead of a vote among Germany's Christian Democrats on who replaces Chancellor Angela Merkel as party leader.
Yields briefly dipped after data showed U.S. jobs growth slowed in November, but soon headed back up - in line with U.S. Treasury yields.
The closely-watched non-farm payrolls report showed the U.S. economy created 155,000 new jobs last month. Economists polled by Reuters had forecast payrolls increasing by 200,000 jobs.
After the jobs data, traders of U.S. short-term interest-rate futures stuck to bets that the Federal Reserve will need to slow its pace of rate hikes sharply next year.
ITALY EYES VOTE
Markets appeared relatively calm ahead of a possible confidence vote in parliament, where the ruling coalition has a large majority, to help accelerate the passage of the 2019 budget.
Two analysts said the vote had little bearing on the market.
"Both leading parties have a strong majority so it doesn't have an impact," said Daniel Lenz, rates strategist at DZ Bank.
However, Deputy Prime Minister Luigi di Maio had to deny that his party had called on Economy Minister Giovanni Tria to resign. (Reporting by Virginia Furness and Dhara Ranasinghe; Editing by Janet Lawrence)
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