World stocks were set for the biggest weekly decline since 2011. Europe's STOXX 600 ended down 1.65 percent <.STOXX.> and Chinese markets fell 4 percent on Friday.
That kept German Bund yields around 0.74 percent
Most other 10-year bond yields in the euro area also eased a touch. U.S. 10-year yields, which on Thursday approached four-year highs hit earlier this week, also inched down
"The risk-off sentiment in global markets should ultimately support sentiment in bond markets," Commerzbank strategist Michael Leister, said.
However, the modest relief comes after Germany, the euro zone's powerhouse economy and its benchmark bond issuer, has seen 10-year bond yields rise for seven straight weeks - the longest stretch of weekly rises since 2007.
Nick Wall, a portfolio manager at Old Mutual Global Investors, said that despite the recent rise, Bund yields remained "artificially depressed" and predicted they would to rise another 10 to 15 basis points in the next six month.
"We expect the general bond selloff to continue and yields to rise meaningfully," he said.
Peripherals underperformed on the day, rising 2 to 5 bps. Portugal's 10-year government bond yield briefly hit a one-month high at 1.942 percent in late trade
Greece's 10-year government bond yields rose 34 basis points to a five-week high of 4.12 percent
Athens raised 3 billion euros in orders on Thursday, through a sale of seven-year bonds.
Borrowing costs in Europe and the United States rose after the Bank of England said on Thursday interest rates probably needed to rise sooner and by a bit more than it had previously thought, given a stronger global economy.
"Yesterday's hawkish Bank of England caused the market to reprice all developed-market central bank paths steeper," said Peter Chatwell, head of rates strategy at Mizuho in London.
The U.S. Federal Reserve's William Dudley also signalled his support for a March rate rise despite market volatility.
Wall at Old Mutual added it had been clear for a while that "government spending would pick up and end austerity which brings better growth, inflation and bond supply, all of which would be negative for bonds."
In Asia, the Japanese government decided on Friday to nominate Haruhiko Kuroda to serve a second term as governor of the central bank when his current term expires in April, a sign the country's ultra-loose monetary policy will remain in place.
Weekly rises in German 10-year bond yields: http://reut.rs/2Bk9bWr
Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr
(Reporting by Dhara Ranasinghe and Sujata Rao, additional reporting by Fanny Potkin; Editing by Larry King)
By Dhara Ranasinghe and Sujata Rao
