2010-07-08 13:53

China bought a net $8.4 billion of Japanese bonds, mostly short-term notes, in May, when the euro slid on heightened concerns over the euro zone's debt crisis, Japanese Finance Ministry data showed on Thursday.

China's net buying of Japanese bonds in May alone exceeded the $6.2 billion of net purchases it logged in the first four months of 2010.

China bought a net 694.8 billion yen in short-term yen notes and 40.4 billion yen in medium- to long-term Japanese bonds in May, MOF data shows, bringing their total net buying of Japanese bonds between January to May of this year to 1.28 trillion yen.

Market players say such purchases do not represent a shift in China's long-term investment stance but are more a short-term move to park funds in yen while sovereign debt concerns buffet the euro.

Analysts say China has been shifting some of its $2.4 trillion in foreign exchange reserves -- the world's largest stockpile -- into a wider range of currencies in recent months, including assets elsewhere in Asia and in commodity-producing countries.

Roughly a quarter is estimated to be held in euro-denominated assets, primarily sovereign bonds, analysts say.