Japan to buy euro debt as Portugal resists bailout
TOKYO/LISBON: Japan promised on Tuesday to buy euro zone bonds this month in a show of support for Europe's struggle with a seething debt crisis .
Portugal, the latest euro zone member in the market's firing line, continued to fend off pressure to seek a bailout. Finance Minister Fernando Teixeira dos Santos said Portugal was doing everything it could to avoid a humiliating EU-IMF financial rescue, already granted to Greece and Ireland.
"We are seeking to avoid this possibility," Finance Minister Fernando Teixeira dos Santos told TSF radio. "We are doing our work. Clearly, Europe is not doing its work to guarantee the stability of the euro."
However, a Portuguese central bank board member, Teodora Cardoso, was quoted as saying Lisbon would do better to seek international financing, breaking ranks with political leaders.
"It would be easier if we had foreign help because this would mean that the adjustment would not be so abrupt, but if we do it alone, for the markets to believe in it, it has to be brutal," Cardoso said according to news agency Lusa.
Yields on Portuguese 10-year bonds remained above 7 percent on Tuesday, a level widely regarded as unsustainable, despite European Central Bank intervention to buy them reported by traders on Monday.
Japanese Finance Minister Yoshihiko Noda said Tokyo was considering using its euro reserves to buy about 20 percent of the AAA-rated bonds to be jointly issued by the euro zone to raise funds to support Ireland.
"I think it's appropriate for Japan to purchase a certain amount of bonds to boost confidence in the EFSF (European Financial Stability Facility) and make a contribution as a major country," No! da said.
Japan's offer comes days after China renewed its commitment to buy Spanish debt and analysts said it reflected both Tokyo's concern about the impact of the crisis on its export-reliant economy and an effort to reassert itself on the global stage.
A senior adviser to China's central bank said in a Reuters interview that Beijing too should be buying safe, jointly guaranteed euro zone debt rather than riskier bonds issued by troubled member states such as Spain and Portugal.
"In principle we support the euro, but we also need to ensure that our investment is safe and generates returns," said Yu Yongding, an influential economist in the Chinese Academy of Social Sciences, a government think-tank.
"I think it's much safer if we buy the fund as it has a triple-A rating," he added.
FINN WARNS
Unofficial estimates described by a senior EU official as credible suggest China holds more than seven percent of the 8.8 billion euros in outstanding euro zone public debt, mostly through its State Administration of Foreign Exchange (SAFE) and sovereign wealth funds.
The European Union set up the 440 billion euro EFSF as a safety net for heavily indebted euro zone nations, but it failed to deter investors from betting on more bailouts.
Portugal, the latest euro zone member in the market's firing line, continued to fend off pressure to seek a bailout. Finance Minister Fernando Teixeira dos Santos said Portugal was doing everything it could to avoid a humiliating EU-IMF financial rescue, already granted to Greece and Ireland.
"We are seeking to avoid this possibility," Finance Minister Fernando Teixeira dos Santos told TSF radio. "We are doing our work. Clearly, Europe is not doing its work to guarantee the stability of the euro."
However, a Portuguese central bank board member, Teodora Cardoso, was quoted as saying Lisbon would do better to seek international financing, breaking ranks with political leaders.
"It would be easier if we had foreign help because this would mean that the adjustment would not be so abrupt, but if we do it alone, for the markets to believe in it, it has to be brutal," Cardoso said according to news agency Lusa.
Yields on Portuguese 10-year bonds remained above 7 percent on Tuesday, a level widely regarded as unsustainable, despite European Central Bank intervention to buy them reported by traders on Monday.
Japanese Finance Minister Yoshihiko Noda said Tokyo was considering using its euro reserves to buy about 20 percent of the AAA-rated bonds to be jointly issued by the euro zone to raise funds to support Ireland.
"I think it's appropriate for Japan to purchase a certain amount of bonds to boost confidence in the EFSF (European Financial Stability Facility) and make a contribution as a major country," No! da said.
Japan's offer comes days after China renewed its commitment to buy Spanish debt and analysts said it reflected both Tokyo's concern about the impact of the crisis on its export-reliant economy and an effort to reassert itself on the global stage.
A senior adviser to China's central bank said in a Reuters interview that Beijing too should be buying safe, jointly guaranteed euro zone debt rather than riskier bonds issued by troubled member states such as Spain and Portugal.
"In principle we support the euro, but we also need to ensure that our investment is safe and generates returns," said Yu Yongding, an influential economist in the Chinese Academy of Social Sciences, a government think-tank.
"I think it's much safer if we buy the fund as it has a triple-A rating," he added.
FINN WARNS
Unofficial estimates described by a senior EU official as credible suggest China holds more than seven percent of the 8.8 billion euros in outstanding euro zone public debt, mostly through its State Administration of Foreign Exchange (SAFE) and sovereign wealth funds.
The European Union set up the 440 billion euro EFSF as a safety net for heavily indebted euro zone nations, but it failed to deter investors from betting on more bailouts.
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