Germany's 10-year Bund yield fell to around 3.15%, staying below the 15-year high above 3.2% reached in July, as renewed hopes for a Middle East agreement pushed oil prices lower and softened inflation concerns. Sentiment improved after Pakistan said the U.S. and Iran were "close to some sort of arrangement" over the Strait of Hormuz, a key shipping route for global energy flows, even as President Trump took a tougher line and said Tehran should pay reparations for deaths linked to attacks and domestic protests in response to demands made by Iran over the weekend. Investors are now weighing whether diplomacy can produce a broader deal and a sustained drop in energy prices, which could ease price pressures and give the European Central Bank (euro zone central bank) more room on monetary policy. The ECB left rates unchanged in July after a 25-basis-point increase in June, its first rate hike in three years.