Treasuries stabilized in Europe on Wednesday as a successful Spanish debt auction overnight calmed some fears about Europe's debt crisis for now, though another auction looms later this week.

Spanish yields extended their fall, with traders closing out short positions after an auction of 12- and 18-month bills on Tuesday met good demand from domestic banks, easing some concerns about the country's ability to finance its debt.

However, investors were not completely reassured by the outcome, and were looking to Spain's auction of two- and 10-year bonds on Thursday as a better test of demand for the country's debt.

Traders said a poor outcome could send benchmark T-note yields back below 2 percent.

The yield was last at 2.0 percent, unchanged from late trade and within the 1.95-2.05 percent range they have been stuck in over the past week as mixed economic data vied with developments in the euro zone.

It's going to be challenging to get us through 2 percent unless we see a really ugly Spanish auction tomorrow and the French auctions struggle as well - maybe that will give another bid to Treasuries that will push yields down to lower levels, a trader said.

The 30-year bond yield was at 3.15 percent, matching its level in late trading on Tuesday.

Apart from events in the euro zone, investor focus is also turning to the Federal Reserve's April 24-25 policy meeting as debate over whether more economic stimulus waxes and wanes.

Investors will be watching Fed Chairman Ben Bernanke's post-meeting news conference for any clues as to whether the central bank will extend its Operation Twist stimulus program which is set to expire at the end of June, under which it sells short-term securities and buys longer-dated ones.