Bund yields inch higher, euro holds ahead of ECB

German debt yields added to their biggest jump in almost three years and the euro held on to its gains on Wednesday, as investors waited to hear the ECB's view of a turbulent run for markets and its hopes for a Greek aid deal.

Markets were generally calmer after Tuesday's heavy sell-off in benchmark government bonds and a mauling given to the dollar by the euro following upbeat euro zone inflation data.

European shares .FTEU3 nudged higher with Greek stocks up for a third day running and buyers moving back into southern euro zone bonds from Italy, Spain and Portugal.

The scandal engulfing world soccer's governing body FIFA weighed on stocks in Qatar amid concerns its winning bid for the 2022 World Cup might be re-examined, but attention was primarily on Wednesday's European Central Bank meeting.

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The bank will publish new forecasts that are expected to bolster signs inflation is back on the rise, while its view on Greece and the sell-off in debt markets which is neutralizing its bond-buying scheme will be of key focus.

"In our opinion, the central bank will not provide any fuel to inflame the 'tapering' discussion which has been repeatedly surfacing in recent weeks," said DZ Bank strategist Birgit Figge.

There was plenty of other news scheduled too. Poland and Brazil, eastern Europe and Latin America's biggest economies, have interest rate decisions and there will be another flurry of U.S. data ahead of Friday's non-farm payrolls. ECONG7

Ahead of the ECB meeting, the euro took a breather at $1.1135 EUR=. It had jumped 2.1 percent on Tuesday in its second biggest daily gain since Oct. 2011.

The dollar was also little changed but momentum was back with the Australian dollar AUD=D4 as it gained following strong GDP data that dealt another blow to rate cut hopes there.