US Treasury debt prices eased in early US trade as traders began to reduce prices ahead of the second part of the Treasury's $44 billion quarterly refunding and speeches by three Federal Reserve Officials.
And euro zone government bonds fell back towards recent multi-month lows, undermined by strong German data, a falling euro and more anti-inflation comments by a European Central Bank official.
France Telecom's 8.125 percent euro bond due January 28, 2033 was bid at 111 basis points over government bonds, after trading earlier with a spread as tight as 109 basis points.
"We had a bit of rally, which brought a few buyers back into long-dated telcos, utilities and financials, but subsequently Treasuries have moved wider, and the bid's now gone on the long end again," one corporate bond trader in London said.
Telecoms bonds had been buoyed by strong results from sector heavyweights Deutsche Telekom and Telecom Italia early on Wednesday and late on Tuesday, a second trader said.
"Obviously the DT results were quite positive for the market, as was TI yesterday, so it was in better shape," he said.
Deutsche Telekom said third-quarter earnings before interest, tax, depreciation and amortisation rose 3.7 percent to 5.487 billion euros, while one-off gains and tax effects helped net profit to reach 2.415 billion euros, ahead of forecasts.
But shares in the company, Europe's largest telecoms group by sales, dropped as it warned that next year's earnings would be hit by a 1.2 billion euro investment plan.
Its 7.5 percent euro bond due January 2033 also gave up earlier gains to trade at 114 basis points over equivalent government debt, the second trader said.
In the market's other major sector, autos, activity was muted. Five-year credit default swaps on General Motors were offered by dealers at 1,000 basis points - some 50 basis points wider - but there were few takers, an autos trader said.
The iTraxx Crossover index, used as a barometer of sentiment in the high-yield market, tightened slightly to 289 basis points.
In the primary market, cement giant Lafarge tweaked price guidance on its forthcoming high-grade deal, while Greek glass maker Yioula Glassworks set out terms for its high-yield bond sale.
Lafarge, the world's largest cement producer, narrowed the price guidance on its planned 500 million euro ($586.9 million) bond due March 2016, said bankers familiar with the deal.
The bond will be sold on Thursday to yield 70 to 72 basis points over mid-swaps, the bankers said, contrasting with earlier guidance of "low 70s" basis points over mid-swaps.
On Tuesday, an official at one of the banks managing the sale said proceeds would be used for general corporate purposes and to help repay an Oceane convertible bond that matures in January 2006.
Yioula, a Greek manufacturer of glass containers and tableware, plans to sell its 130 million euro, 10-year high-yield bond on Thursday to yield 8.75 to 9 percent, according to a banker familiar with the deal.
Citigroup is managing the sale, which Yioula says will help repay existing debt and finance future capital expenditure.