The euro and government bond yields in the single currency bloc shot up after the European Central Bank delivered a 50 basis point rate hike to tame inflation in its first rate increase since 2011.

The euro climbed as much as 0.8% to $1.0261, having traded at $1.0198 just before the ECB's statement.

Benchmark 10-year euro area government bond yields were broadly higher, with Germany's 10-year Bund yield last up 9 basis points on the day at 1.35%.

Ireland's 10-year bond yield was up to 1.944% from 1.836%.

The ECB raised its deposit rate by 50 basis points to zero, or twice as much as it had indicated after its previous meeting, in an effort to curb record-high inflation in the euro zone.

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To cushion the impact of the rise in borrowing costs, the ECB also unveiled a new tool, the Transmission Protection Instrument.

Italian bond yields extended their rise following the decision, with the 10-year yield last up 20 bps on the day to 3.703%, the highest since June 28. The closely watched spread to German peers widened briefly to 239 bps, but was last back to pre-decision levels near 235 bps.

The pan-European STOXX 600 index struggled for direction, briefly falling after the ECB decision before flattening. Euro zone banks jumped 1.2% with the ECB's move out of negative-rate territory seen lifting bank profits.

+Additional reporting Reuters