German government bonds experienced a bear flattening, outperforming U.S. Treasuries. This followed stronger-than-expected U.S. durable goods orders data for December, which weighed on U.S. debt.

Interest rate swaps linked to European Central Bank policy meeting dates remained largely stable. Markets are currently pricing in approximately 8 basis points of rate cuts by the end of the year. ECB policymaker Schnabel is scheduled to speak after the close of eurozone markets.

The UK gilt yield curve's flattening trend reversed in the mid to long end. The market showed a limited reaction to the UK's January Consumer Price Index (CPI) data, which showed a broad slowdown in line with expectations. Money markets currently anticipate 48 basis points of rate cuts from the Bank of England this year, unchanged from Tuesday.

Market levels: The yield on the 10-year German government bond was largely flat at 2.74%. The German government bond futures contract fell by 4 ticks to 129.29. The yield on the 10-year Italian government bond decreased by 1 basis point to 3.34%. The yield on the 10-year French government bond held steady at 3.31%. The yield on the 10-year UK government bond was stable at 4.37%.