Concerns over France's fiscal position weighed on French government bonds, pushing the spread between French and German 10-year yields to nearly 120 basis points, the widest since June 2012.

The yield on France's 10-year government bond rose 4 basis points to close at 4.81%, 119 basis points above the equivalent German bund. Germany's 10-year yield fell 2 basis points on the day to 3.63%. France plans to issue a record volume of debt in 2027.

The UK yield curve steepened, tracking moves in US Treasuries. UK Prime Minister Andy Burnham, speaking at the Labour Party conference, pledged to reopen discussions on Brexit, pensions and the electoral system, calling for changes aimed at reshaping the British political landscape.

Investors welcomed a commitment to ultimately abolish the state pension "triple lock" mechanism, under which pensions currently rise by the highest of wage growth, inflation or 2.5% each year.

Market snapshot: Germany's 10-year government bond yield fell 2 basis points to 3.63%; German bund futures rose 26.00 ticks to 119.54; Italy's 10-year government bond yield rose 2 basis points to 4.61%; the spread between Italian and German government bonds widened 4 basis points to 99 basis points; France's 10-year government bond yield rose 4 basis points to 4.81%; the 10-year UK gilt yield fell 1 basis point to 5.41%.