European bond yields jumped on Thursday, with the 10-year bund yield puncturing a recent "ceiling" of 50 basis points, and the weakness in bonds spilled over into equity markets and stoked the euro.

Amid heightened geopolitical tensions, especially over North Korea, markets are looking for a show of strength from leaders gathered on Friday for a Group of 20 meeting in Hamburg, including a first face-to-face meeting between US president Donald Trump and Russian president Vladimir Putin. Friday also brings key economic data in the form of the US June employment report, also known as nonfarm payrolls.

The leap in European yields was triggered by the minutes of the European Central Bank's June meeting where the ECB's policymakers acknowledged that the bank is prepared to take a further step to reduce monetary stimulus.

"We have been talking about a 50 basis points ceiling for bunds," says Saxo Bank's fixed-income trader Michael Boye. "It finally broke through that level with ease."

The 10-year bund blasted through 0.50% and ended at its highest yield since January 2016.

"For now it seems like the tightening trade is most certainly on for the Eurozone — where it hurts the most is long-duration bonds," Boye says.

The rise in yields spread weak sentiment to other assets, with especially European shares hit hard as the market repositions itself for higher real yields in Europe and a stronger euro, says Saxo Bank's head of equities strategy Peter Garnry.

"The big story is the rise in yields," Garnry says.

A previous spike in yields in April was accompanied by rising equities prices, particularly bank stocks, whereas this time — after a recent hawkish tilt from several central banks — share prices are taking a hit, Garnry adds.

US technology stocks were sold off again overnight, with the less liquid names heaviest hit, Garnry says.

Shares in US electric car-maker Tesla lost another 6% on increased worries about demand, he says.

“Where do you hide if yields go higher?” Garnry asks. Historially, financials, healthcare, consumer staples and technology stocks have done better than the market in such circumstances, he says.

With the rise in yields, EURUSD bounced strongly off a key local retracement level ahead of the 1.300 pivot area, says Saxo Bank's head of FX strategy John J Hardy. (Read also Hardy's latest FX Update here on TradingFloor.) 

Beleaguered crude oil was given a lift by improved US inventories data, though that data is offset by persistently increasing production, says Saxo Bank's commodities strategy chief Ole Hansen.

US total inventories dropped the most since last September, while US production has been flat for the past five weeks, Hansen says, but the market needs continued improvement in the US weekly data after Opec production hit new high for the year, with increasing supplies from Nigeria and Libya.

WTI crude oil is finding support around $44.65/barrel, but a drop to $44.05 could attract increased short-selling, Hansen says.

Meanwhile, helped by the increase in geopolitical worries, gold prices are holding up, despite the rise in yields, which works in the opposite direction.

A flash crash in silver prices in early Asia trading will be the main focus among precious metals traders today as the market seeks answers about what and why it happened, Hansen says.