LONDON - Euro zone government bonds dipped on Thursday, following a rally the previous day over optimism ‌for a possible Iran peace deal that cooled some of the concern that has pushed yields around the world to multi-year, and even record, highs ​this week.

Iran said on Thursday it was reviewing Washington's latest position on ending the war after U.S. President Donald Trump suggested he was prepared to ​wait ​a few days to "get the right answers" from Tehran, but warned of renewed attacks if it did not agree to a deal.

The oil price, which is nearly 50% higher than where it was prior to the war, has ⁠fallen 3% this week, but is still above $100 a barrel. One-year euro zone inflation swaps are trading around 3.7%, well above the European Central Bank's 2% target rate. 

German 2-year Schatz yields, which are the most sensitive to shifts in expectations for rates and inflation, were up 2.5 basis points at 2.5657% in early trading, having fallen nearly 7 bps this week, while two-year Italian yields were 1 ​bp higher at 2.853%, ‌set for a ⁠weekly decline of 10 bps.

A ⁠series of preliminary surveys of business activity for May for the euro zone, as well as for Germany and France, are due out later ​and could show how companies are handling the surge in input costs and the uncertainty ‌that have dominated the past couple of months.

"Generally, equity markets have held up ⁠and oil has remained around $100 a barrel," strategists at RBC Capital Markets said.

"It was the services sector that saw the most weakness in April, while manufacturing held up on the back of some front-loading ahead of potential shortages. We will likely see the reverse dynamics this month."

Yields on benchmark 10-year German Bunds, which have fallen 5.5 bps this week, were flat at 3.1%, near their highest since 2011, while 10-year Italian BTP yields were up 1 bp at 3.85%, having fallen 12 bps this week so far.

The difference between the two, which reflects the extra premium investors demand to hold Italian debt rather than German, is a key market-based indicator of risk appetite right now.

That spread was last at 73.06 bps, a touch narrower on the ‌day, but well above where it traded prior to the war in late February, ⁠below 60 bps.

On the supply front, both Spain and France are due to ​sell debt.

Spain will sell a combined 6.5 billion euros ($7.56 billion) in 2031, 2033 and 2050 paper, while France sells a total of 14 billion euros in 2029, 2031, 2032 and 2033 nominal bonds, plus an additional 1.75 billion euros in long-dated inflation-linked OATs maturing in 2034, 2036 and ​2047.

In the United ‌States, minutes from the Federal Reserve's most recent meeting showed more policymakers were open to ⁠the possibility of interest rate hikes as their concerns ​over inflation stemming from the Iran war intensified.

($1 = 0.8603 euros)

(Reporting by Amanda Cooper; Editing by Jan Harvey)