Germany's rate-sensitive two-year yield rose to as much as 2.6668 percent, its highest since April 7, and was last at 2.6446 percent.

Meanwhile the euro zone benchmark, Germany's 10-year yield, reached 3.086 percent, again a two-week high. It was last 3.3 basis points higher at 3.0718 percent.

Both are still below their levels hit in late March before the US and Iran agreed a ceasefire, but they have been ticking steadily higher in recent sessions as the continued effective closure of the Strait of Hormuz means energy prices continue to grind higher.

Hopes for an imminent resolution to the two-month US and Israeli war on Iran, which has disrupted energy supplies and fueled inflation, have been fading.

The United Arab Emirates said on Tuesday it was quitting oil producers' group OPEC, as an unprecedented energy crisis triggered by the Iran war exposes discord among Gulf nations.

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On Tuesday Donald Trump said Iran had informed him it was in a "state of collapse" and was figuring out its leadership situation, as efforts to end the conflict appeared at an impasse with the US president unhappy at the latest plans from Tehran.

Investors now see a greater chance of the ECB raising interest rates in an effort to prevent the higher oil and gas prices spilling over into broader price rises, despite the negative impact this would have on economic growth.

Those fears were underscored on Tuesday by the ECB survey, which showed inflation expectations for one year ahead had jumped to 4.0 percent in March from 2.5 percent a month earlier, while bets for three years out rose to 3.0 percent from 2.5 percent, both well above the ECB's 2 percent target.

ECB focused on inflation, not growth

Complicating the picture, a separate survey showed economic growth is faltering, though the market focus was firmly on the inflation expectations survey.

"The market is more worried about inflation than growth, and this is partly because if you look historically you find the ECB gives four times as much weight to inflation as it does to growth, whereas the Fed gives equal weight," said Mohit Kumar, chief Europe economist at Jefferies.

ECB policymakers are expected to keep rates on hold when they meet on Thursday as they await more evidence about the duration and extent of the energy-induced inflation shock, but hikes are expected to be on the table by their next decision in June.

Markets are currently pricing in around an 85 percent chance that the ECB raises rates by its June meeting and fully pricing in two 25-basis-point rate hikes by its September meeting. That pricing is slightly higher than it was before the survey was published.

"In June, they [the ECB] will also have staff forecasts [of economic indicators including growth and inflation] and typically it's easier for them to make a decision at such meetings because they can justify it based on the forecasts," said Kumar.

"Though our base case is we shouldn't get a rate hike, because we believe that we are moving towards a deal and in three months' time, we see oil going to US$80 to $85 a barrel, but of course, it's uncertain, and geopolitics is always difficult to predict."

Brent crude futures for June were 2.9 percent higher at $111.35.

Other euro zone yields moved higher alongside Germany's. Italy's two-year yield rose 6.4 basis points to 2.8663 percent, earlier hitting its highest in three weeks, and its 10-year yield gained 4.4 basis points to 3.8975 percent.

Other central banks are also meeting this week. The Bank of Japan kept rates unchanged on Tuesday but struck a hawkish tone, sending 10-year Japanese government bond yields up towards a 29-year peak.

The Federal Reserve concludes its meeting on Wednesday and the Bank of England on Thursday.

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