German bond yields tracked the move higher in U.S. Treasuries but any major rise in yields is likely to be tempered by underlying expectations for continued monetary easing in the bloc.

Hopes are building for the resolution of a long standing trade war between the U.S. and China with the South China Morning Post reporting a tentative truce in their trade dispute ahead of a meeting between leaders of the two nations at the G20 summit this weekend.

Trump said on Wednesday a trade deal with Chinese President Xi Jinping was possible this weekend but he is prepared to impose U.S. tariffs on virtually all remaining Chinese imports if the two countries continue to disagree.

Germany's 10-year bond yield reached its highest level in a week at -0.278%, up over two basis points on the day, while its 30-year bond yield was up over three basis points to 0.30%, its highest level in a week.

Most other 10-year yields in the bloc were around two basis points higher.

German inflation data due on Thursday is expected to provide some further guidance as to the path of European monetary policy.

German inflation expectations have fallen with economists at DZ Bank expecting 1.2% growth.

"This is another factor contributing to the strong demand and means a good environment for bonds," said DZ Bank strategist Christian Lenk.

Speculation is mounting as to when and if the European Central Bank will introduce a second round of quantitative easing in an attempt to stimulate growth in the bloc.

Estimates range from October this year, to the first quarter of next year, though not all analysts are convinced the macro-backdrop warrants another programme.

"We have our doubts that the ECB is really that close to a new round of QE," said DZ Bank's Lenk. "We expect the economy to gain a little bit of steam in H2; a new round of QE would be a contingency plan if the risks we see escalate."

But many are banking that rates will remain lower for longer and strong demand for bonds meant that Austria was able to place a five year bond at a yield of -0.435%, becoming the first euro zone sovereign to price a public sale of debt below the -0.40% deposit rate.

Austria also reopened its 100-year bond to raise an additional 1.25 billion euros