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China's support for euro sparks Asian markets rally

China's support for euro sparks Asian markets rally

China's rebuttal of claims that it was reviewing its eurozone debt holdings prompted Asian markets to rally yesterday, lifting the euro and raising hopes the continent's debt crisis will not spread.
The gains extended from the previous two days after several weeks of losses and returned some confidence to the market.
Tokyo jumped 1.72 percent by the break, Hong Kong added 1.67 percent, Sydney was up 1.83 percent and Shanghai rose 0.77 percent in early trade.
Investors were given a strong cue by U.S. and European markets, which soared Thursday after Beijing described as "baseless" a report it was re-examining its debt holdings in the eurozone due to the region's financial turbulence.
The Financial Times story claimed that State Administration for Foreign Exchange (SAFE) officials had recently met foreign bankers on the issue in Beijing.
But on Thursday SAFE said: "China's foreign exchange reserves (agency), as a responsible long-term investor, has always held a diversified investment strategy.
"The European market was and is one of the most important investment markets for (China's) foreign exchange reserves and will remain so in the future."
SAFE holds an estimated US$630 billion of eurozone bonds.
The news lifted the embattled euro above US$1.2300 in New York, after it dived close to a four-year low below US$1.22 earlier this week on eurozone jitters, while it also jumped around two yen from Thursday's Asian price.
In Tokyo early yesterday the euro was at US$1.2318 against US$1.2364 late in New York and at 112.30 yen from 112.47.
World stocks have been under severe pressure due to lingering concerns that major debt problems in countries including Greece and Spain could derail the global recovery, despite a trillion-dollar rescue package.
Stocks were dented further on Tuesday due to growing tensions on the Korean peninsula, after Seoul blamed the North for the sinking of a South Korean warship.


Updated : 2021-07-30 16:40 GMT+08:00