LONDON, Feb 26 Reuters Euro zone government bond yields stabilised on Friday after this weeks dramatic selloff, although Germanys benchmark yield was still headed for its biggest monthly jump since 2016 as rising inflation expectations triggered selling of safehaven debt.

The moves in euro zone yields early on Friday were more limited than in recent volatile days, however, and yields on U.S. Treasuries which have led the selloff dipped barely 4 basis points to 1.477 after hitting a more than oneyear high on Thursday.

The rise in government bond yields, initially spurred on by fiscal stimulus hopes in the United States and a postpandemic economic rebound that could fuel inflation, has spilled over into the euro area.

Policymakers have sought to dispel fears that they would tighten policy any time soon. The European Central Bank said this week it was closely watching the rise in yields.

Germanys 10year yields, the regions benchmark, are set for their biggest monthly gain since 2016 with a whopping 27 basis point rise as of 0755 GMT.

On Friday, they rose to as high as 0.203, a level not matched since the COVID19 market crash last March, before trading down 2 basis points at 0.255.

French and Austrian 10year yields passed a big milestone on Thursday, both turning positive for the first time since June ,. They both fell around 2 basis points in early Friday trading but were still just in positive territory.

Investors and analysts said the bonds selloff, which has…