Italy’s 10-year bond yield fell toward 3.5%, its lowest level since July 7, as investors focused on the European Central Bank’s upcoming policy decision and flash PMI data from Europe’s largest economies, both due on Thursday.
Sentiment also remained cautious amid ongoing EU-US trade talks.
The ECB is widely expected to keep interest rates unchanged after eight consecutive cuts, with policymakers adopting a wait-and-see approach amid lingering tariff risks, a firm euro, and muted inflation.
At the same time, the flash composite PMI for the eurozone is forecast to post a modest gain in July.
Separately, EU envoys are preparing to meet as early as this week to discuss contingency measures in the event of a breakdown in trade negotiations with US President Donald Trump, whose tariff stance appears to have hardened ahead of the August 1 deadline.