New fears for euro future
CONCERNS about the future of the euro grew this morning after it emerged that China was reviewing its Eurozone debt.
Officials in Beijing, which has the world's largest foreign exchange reserves, are reviewing the country's Eurozone debt holdings in the wake of Europe's financial problems, according to reports this morning.
China is said to be worried about the risk posed to euro-based investments by the weaker countries in the 16-member bloc.
China's State Administration of Foreign Exchange (SAFE), which manages the reserves, has expressed concern about its exposure to the five eurozone markets of Greece, Ireland, Italy, Portugal and Spain. SAFE holds an estimated $630bn (€511bn) of Eurozone bonds in its reserves. Its officials have been meeting with foreign bankers in Beijing in recent days to discuss the issue.
About 70pc of China's reserves are held in US dollar securities, but the composition and management of the funds controlled by SAFE are regarded as state secrets.
Analysts say the report is among the reasons for a US stock market reversal last night from strong gains earlier in the day.
Marc Pado, market strategist at Cantor Fitzgerald & Co, said: "The market is tracking the euro; the euro is still the problem."
Officials at SAFE declined immediate comment on the report.