European government bonds bounced back on Friday following a sharp sell-off earlier in the week, providing some relief to investors even as energy prices remained elevated. The recovery was broad-based, with the short end of the global yield curve performing particularly well as traders adjusted their positions.

US short-dated Treasuries received additional support from comments by Federal Reserve Governor Christopher Waller. Waller indicated that his next policy decision would be "heavily influenced" by the August inflation data, which is scheduled for release next week, fueling expectations of a potential pause in rate hikes.

UK gilts led the rebound in the European bond market, with the yield on the 2-year gilt falling 10 basis points to 4.52%. This marked the largest daily decline among major European sovereign bonds, as investors sought more attractive valuations after the recent sell-off.

Meanwhile, other European bond markets also saw yields decline. German 2-year bond yields dropped 3 basis points to 3.35%, while the German bund futures contract rose to 122.99. Italy's 10-year bond yield decreased 5 basis points to 4.16%, narrowing the spread over German benchmarks by 1 basis point to 82 basis points. France's 10-year bond yield also fell 5 basis points to 4.21%.

In the longer-dated segment, the 10-year UK gilt yield slid 9 basis points to 5.14%, reflecting a broader risk-on sentiment across European fixed income markets despite persistent concerns over energy supply and inflation.