German government bonds fell as traders increased their expectations for European Central Bank interest rate hikes ahead of weekend peace negotiations between the United States and Iran. The decline in bond prices pushed the yield on Germany's 30-year government bond to 3.58%, reaching its highest level since 2011.

Swap market pricing indicates that markets now anticipate an 8 basis point rate hike from the European Central Bank later this month, up from the 7 basis points projected on Thursday. Traders are currently pricing in a total of 62 basis points in rate increases for the current year.

Italian government bonds underperformed most European sovereign debt. French bonds also trailed German bunds as Moody's prepared to assess France's sovereign credit rating.

UK government bonds likewise declined, despite traders maintaining their expectation of a 5 basis point rate hike from the Bank of England later this month. However, they increased their full-year rate hike projections by up to 9 basis points.

Market movements: German bond yields rose 6 basis points to 3.05%. German bond futures fell 28 points to 125.14. Italy's 10-year government bond yield increased 8 basis points to 3.82%. The Italy-Germany bond yield spread widened by 3 basis points to 77 basis points. France's 10-year government bond yield climbed 8 basis points to 3.69%. The UK's 10-year government bond yield advanced 7 basis points to 4.82%.