Germany's 10-year government bond yield on Friday turned negative for the first time since October 2016, as a survey showing German manufacturing contracted for a third straight month fueled concern about a widespread European slowdown.

Germany's 10-year bond yield fell almost five basis points to -0.014 percent.

It has tumbled around ten basis points this week alone amid uncertainty regarding Brexit and as the Federal Reserve ruled out raising interest rates this year. The weak German purchasing managers survey data only added to the gloomy outlook for global growth, giving bond yields a fresh push lower on Friday.

IHS Markit's flash composite Purchasing Managers' Index measuring activity in German services and manufacturing, which together account for more than two-thirds of the economy, fell to 51.5 in March, its lowest reading since June 2013.

The broader euro zone PMI showed that businesses across the entire euro zone have performed much worse than expected this month with factory data contracting at its fastest pace in nearly six years, hit by a big drop in demand.

The euro extended its losses tumbling more than half a percent to below $1.13 on the day, while Europe's STOXX 600 index fell to a session low and was on track for a weekly drop of 0.7 percent.

Other euro zone bond yields also fell sharply, with French 10-year bond yields also at their lowest since October 2016, and down around five basis points.

The move was more pronounced at the long-end however, with German and French 30-year bonds down eight basis points to 0.60 percent and 1.35 percent, putting both on track for their largest one-day fall since December 2016.

Other 30-year bond yields were down around five basis points , as investors looked for yield further down the curve.

"The narrative behind it isn’t a big surprise ... But the size of the surprise is fairly material. These things happen very rarely, and the surprise is what matters the most for market activity," said Antoine Bouvet, rates strategist at Mizuho.

Germany's 10-bond yield last hit zero percent on Oct. 21, 2016, when Mario Draghi dispelled market concerns about tapering and said the ECB remained committed to its asset purchase program.

"We think Bund yields can now certainly revisit the minus 0.15 percent area which refocuses investor concerns about the growth trajectory," said Rabbani Wahhab, senior fixed income fund manager at London and Capital.

The fall in German bond yields was echoed across other major markets while peripheral bond yields rose.

Ten-year U.S. Treasury yields fell below 2.5 percent for the first time since January 2018 and were last seen at 2.478 percent, while Japanese government bond (JGB) yields plunged to their lowest since November 2016.

Italian government bond yields were up to five basis points higher, while the spread of Italian 10-year bonds over Germany touched 252 basis points, its widest in over two-weeks.

Though looser monetary conditions and lower rates are good for bond holders, they are a result of concerns about global growth which is evident in the shape of the U.S. yield curve.

At just 54 basis points, the difference between the two and 10-year German bond yields is at its lowest since October 2016, and has fallen from 130 basis points in February 2018.

Brexit remained in focus with the European Council on Thursday voting to delay Britain's exit by two weeks until April 12, with a possible extension to May 22 if lawmakers approve the withdrawal agreement next week.

Ten-year British government bond yields briefly rose in early trade but were last down 2.3 bps at 1.040 percent, having fallen more than nine basis points a day earlier.