European bond markets extended their selloff for a third consecutive session as surging oil and natural gas prices reignited inflation concerns. German and UK yields edged higher while Italian bond spreads over German debt widened to 72 basis points, the widest since November. Spanish bonds also declined despite no visible impact from US trade threats against Spain.

Market attention remains focused on the inflationary consequences of the energy price surge following Middle East tensions. European natural gas prices are trading near their highest levels since 2023, with oil climbing to $84 a barrel. A US plan to protect Mideast shipping lanes through the Strait of Hormuz failed to calm investor sentiment.

Traders are increasingly pricing in the possibility of a European interest rate hike by year-end, with money markets showing a one-in-three chance of such a move. Policymakers including Luis de Guindos and Francois Villeroy de Galhau are scheduled to speak later Wednesday. Analysts warn that the euro area's heavy reliance on energy imports makes it particularly vulnerable to the ongoing price shock.