Euro zone bond rally pauses even as oil dips further, eyes on Fed

Euro zone bond yields steadied on Tuesday, having fallen for the past two sessions along with oil prices, as traders turned their attention to this week's U.S. Federal Reserve meeting.

Germany's 10-year government bond yield, the benchmark for the euro zone, was last flat on the day at 3.13%.

Last week, it hit 3.2118%, its highest level since 2011, but has been declining since then as a lull in hostilities between the U.S. and Iran brought the price of benchmark Brent crude oil below $87 a barrel.

That eased traders' worst fears of a surge in inflation that would cause central banks to raise interest rates aggressively, weighing on economic growth.

President Donald Trump said on Monday the United States was having "good talks" with Iran, and there was a chance of a deal, but threatened to restart strikes unless negotiations deliver. Iran denies seeking to resume talks with the United States.