Euro zone bond yields tick higher a day after big swings

Germany's 10-year bond yield DE10YT=RR, the benchmark for the euro zone, rose 2 bps to 3.091%.

A jump in oil prices over the last week has seen traders sharply raise their bets on ECB rate hikes this year, but they wound them back in somewhat after the U.S. CPI inflation data.

Money markets were last pricing in 43 bps of further ECB tightening this year, up from 30 bps a week ago but down from a peak of 48 bps on Tuesday.

Data on Tuesday showed headline U.S. inflation slowed more than expected to 3.5% year-on-year in June, down from 4.2% in May, although the fall was largely due to a drop in energy prices which is now under threat.

Analysts at ING said ECB rate pricing was likely to be mainly driven by oil and gas prices.

"Markets’ European Central Bank pricing can continue to diverge from the Fed’s," the analysts, Michiel Tukker and Benjamin Schroeder, wrote on Wednesday.