Euro zone government bond yields dipped on Thursday with the focus on events outside the currency bloc, particularly U.S. jobs data due later in the day, and the British gilt market after the previous day's sharp selloff there.

Germany's 10-year bond yield was down 4 basis points on the day at 2.58%, which Kenneth Broux, head of corporate research FX and rates at Societe Generale, said was a reversal of Wednesday's "UK induced sell off and spike above 2.60%".

Euro zone bonds got caught up in the gilt selloff that was driven by renewed worries about the UK's public finances and the future of finance minister Rachel Reeves.

Germany's 10-year yield, the euro zone benchmark, rose 5 basis points on Wednesday.

British Prime Minister Keir Starmer said later on Wednesday that Reeves will be in post "for a very long time to come,". Gilt yields were down around 8 basis points on Thursday.

Barring any further surprises, the main event for global bond markets on Thursday is U.S. non-farm payrolls due 1230 GMT. Analysts expect the labour market to have slowed further in June, with the unemployment rate expected to have edged up to a more than a 3-1/2-year high of 4.3%, as economic uncertainty stemming from the Trump administration's policies curbed hiring.

Broux said the data would help indicate whether market repricing of more Federal Reserve rate cuts this year had gone too far.

He added that while U.S. inflation data later in the month was the most important data release, if the jobs numbers were higher than expected that would "strengthen the hand of the hawks on the FOMC", the Fed's rate setting body, represented by its chair Jerome Powell, and "their conviction that waiting is the better option to assess the impact of tariffs".

Markets currently see at least two 25 basis point Fed rate cuts this year, likely starting in September, and roughly a 50% chance of a third.

The European Central Bank, which has been much more aggressive than the Fed when it comes to rate cuts, with inflation in control and growth more sluggish, is much nearer the end of its cutting cycle.

Markets see the ECB cutting just once more this cycle, likely late this year.

The other U.S. development on investors' minds is U.S. President Donald Trump's tax-cut and spending bill which Republicans in the House of Representatives advanced toward a final yes-or-no vote early on Thursday morning.

Back in Europe, Italy's 10-year yield was down 5 basis points on Thursday at 3.49% having risen 6 bps the previous day.

France's 10-year yield was down 4 bps, also after a 6 bps Wednesday jump.

(Reporting by Alun John; editing by Philippa Fletcher and Louise Heavens)