Euro zone bond yields steady as inflation, fiscal worries remain in focus

The region has, however, proved unexpectedly resilient, which was underlined again by preliminary August business surveys on Friday. They showed that euro zone business activity this month has been growing at its quickest rate since November, flagging stronger new orders, particularly in manufacturing, and renewed export growth, as well as easing price pressures.

The data "suggests that the euro-zone economy is continuing to shrug off the effects of higher energy prices," Harry Chambers, assistant economist at Capital Economics, said.

Money markets, however, are still pricing in at least one more interest rate hike from the European Central Bank by year-end, with chances of a policy increase in September at over 90%.

The yield on Germany's 2-year bond DE2YT=RR, which is more sensitive to interest rate expectations, was little changed at 2.8361%.