The ECB is tipped to cut its key rate to 2% on Thursday, its eighth move this cycle.

Traders reckon a pause will then follow as the economy holds up better than anticipated and longer-term inflation worries creep back.

Traders’ focus is on economic data ahead of the meeting, with euro zone inflation expected to drop to 2% tomorrow, following final business activity data due today.

US President Donald Trump said on Friday he planned to increase tariffs on imported steel and aluminium to 50% from 25%, ratcheting up pressure on global steel producers and deepening his trade war.

Today, Germany’s 10-year yield, the benchmark for the euro area, was last up 2 bps to 2.53%.

Its 30-year yield was up 3 bps to 3.03%.

Traders were also cautious around a 10-year Japanese auction taking place tomorrow, which comes following weak demand for long-dated auctions in May.

The closely watched gap between Italian and German 10-year bond yields widened to 97 bps.

Italian 10-year yields were up 3 bps to 3.52%.