Euro zone bond yields tumbled on Thursday after data showed business activity in the bloc had slowed much more than expected in June, adding to concerns over global growth that have shaken markets this week.
S&P Global's flash composite purchasing managers' index dropped to 51.9 in June from 54.8 in May, indicating significantly slower growth in activity.
Economists polled by Reuters had expected a reading of 54.0.
Bond yields had already dropped sharply on equivalent data from the bloc's leading economies - Germany and France - before the pan-euro zone figures showed similar results.
The data add to fears around growth and a potential recession that have gripped markets this week. This was fuelled by inflation data out of Britain and comments from U.S. Federal Reserve chairman Jerome Powell, who said the central bank was committed to bringing inflation under control even if it risked an economic downturn.
Germany's 10-year bond yield, the benchmark for the euro area, fell nearly 15 basis points to 1.474%, its lowest in 1-1/2 weeks. It was down 12 bps to 1.51% by 0815 GMT.
The moves follow another 14-basis-point drop in the yield on Wednesday, setting it for the biggest two-day fall since the beginning of March.
Five-year yields, which are more sensitive to the policy outlook, fell the most and were down nearly 17 bps. Italy's 10-year bond yield fell similarly, to as low as 3.508%, the lowest in two weeks.
"It seemed like yesterday recession risks were the main topic and that's how the market traded and these PMIs just give the market an extra reason to go another leg further with that sort of scenario," said Peter McCallum, rates strategist at Mizuho.
"I still think it's difficult for yields to be sustainably lower when we haven't got inflation data yet peaking, but it is a precursor to what we think we're going to get more of towards Q4, when the economy starts slowing down."
Money markets also pared back bets on rate hikes from the European Central Bank. They now price in around 160 basis points of rate hikes by December, compared with the expectation of 170 basis points before Thursday's data.
The European Central Bank will raise its deposit rate above zero for the first time in a decade in September, with a 50 bps move taking it to 0.25%, according to most economists polled by Reuters.
The poll saw the neutral rate, which neither stimulates nor restrains demand, at between 1% and 1.75%.