European government bonds extended their decline following the recent move in US Treasuries, with UK gilts registering the most pronounced drop on the day. The regional complex briefly regained some ground intraday, but sellers re-emerged, pushing yields to finish modestly higher across most tenors. The 30-year German Bund yield touched a peak of 3.84% before settling essentially flat, while the 30-year French OAT yield edged up 1 basis point to 4.95%.

The standout underperformer was the UK gilt market, which returned from a holiday closure on Tuesday to play catch-up with the global selloff. The 30-year gilt yield spiked to 5.89%, its highest level since May 1998, before easing back to 5.86%. Traders have ramped up expectations for Bank of England tightening, with the current market pricing implying cumulative rate hikes of 35 basis points by December. Meanwhile, investors continue to keep a close watch on natural gas and crude oil prices for any fresh inflationary impulses.

In the broader fixed-income arena, the 10-year German Bund yield rose 2 basis points to 3.34%, while the Bund futures contract shed 24.00 ticks to settle at 123.02. Italy's 10-year BTP yield added 2 basis points to 4.17%, with the spread over German Bunds remaining broadly steady at 83 basis points. The 10-year French OAT yield gained 2 basis points to 4.20%, and the benchmark 10-year UK gilt yield climbed 8 basis points to 5.22%.