Euro zone government bond yields fell to six-month lows on Tuesday as the German statistics office said the country had escaped a recession but still recorded its slowest growth in half a decade in 2018.
Italy, meanwhile, priced its first syndicated bond deal in a year. It sold 10 billion euros ($11 billion) of a new 15-year bond, after drawing orders for more than 35.5 billion euros, a lead manager told Reuters.
For broader markets, the focus remained on German data which showed Europes biggest economy grew 1.5 per cent in 2018.
The Federal Statistics Office said the economy probably grew slightly in the final three months of 2018 after contracting in the third quarter.
While this allays investor concerns that Germany would slip into recession and undermine the European Central Banks plan to gradually end crisis stimulus measures, it has only done so by the skin of its teeth.
"Germany escaped a technical recession but 2019 wont be easy with a weak start. Trade talks and euro zone momentum will be essential," Ludovic Subran, head of global macroeconomic research at Allianz, said on Twitter.
There was little immediate reaction to comments from ECB chief Mario Draghi, who said recent economic developments have been weaker than expected and that a significant amount of monetary policy stimulus was still needed.
The ECB has said it will hike rates later in 2019, but money market investors price in around a 40 percent chance this will happen.
As a result, most high-grade euro zone bond yields hit new lows on Tuesday.
Frances 10-year bond yield dropped a basis point to 0.613 per cent, a new six-month low. Long-dated bond yields in Belgium and Ireland also hit six-month lows at 0.665 per cent and 0.8 per cent respectively.
Dutch 10-year yields dropped to 0.31 per cent, near its lowest since April 2017.
In German, five-year bond yields fell to minus 0.3640 per cent, the lowest since May, 2018.
Germanys 10-year bond yield, the benchmark for the region, was 2 bps lower at 0.21 per cent.
This weeks change in the German benchmark 10-year bond means the yield is not touching any milestones. The benchmark has moved to the February 2028 bond from an August 2028 maturity.
That 2028 bond is yielding 0.15 per cent, marginally off 20-month lows of 0.141 per cent hit at the start of the year.
In Italy, long-dated bond yields rose as investors sold existing bonds to make way for the new 15-year bond .
Italy drew more than 30 billion euros of orders for the new bond sold through a syndicate of banks, showing strong appetite for Italian debt after Rome resolved a protracted row with Brussels over its budget.
"The levels are more attractive than we had expected," said Arnaud-Guilhem Lamy, a fixed-income portfolio manager at BNP Paribas Asset Management.
Bond markets will also closely watch the upcoming vote in the UK parliament on British Prime Minister Theresa Mays deal to leave the European Union. She is widely expected to lose the vote.