UPDATE 1-China ready to buy 4-5 bln euros of Portugal debt-paper

(Adds China c.bank “no comment”, background, market reaction)

LISBON, Dec 22 (BestGrowthStock) – China is ready to buy 4 to 5
billion euros ($6.6 billion) of Portuguese sovereign debt to
help the country ward off pressure in debt markets, the Jornal
de Negocios daily reported on Wednesday.

The paper said, without citing any sources, that a deal
reached between the two governments will lead to China buying
Portuguese debt in auctions or in the secondary markets during
the first quarter of 2011.

China’s central bank declined to comment on the report.

The euro rose to the day’s high versus the dollar on
Wednesday on the back of the report, climbing around 30 pips to
a session high of $1.3168 according to Reuters data (EUR=: ).

Portugal has moved into the eye of the storm in Europe’s
debt crisis, with borrowing costs spiking as investors grew
concerned it would be next in line to seek an international
bailout after Ireland and Greece.

Finance Minister Fernando Teixeira dos Santos met Chinese
Finance Minister Xie Xuren and the head of the People’s Bank of
China during a visit to the country last week.

Portuguese officials have said the government is trying to
diversify the debt investor base, with China as a priority.

In October, during a visit to Greece, Chinese Premier Wen
Jiabao offered to buy Greek bonds when Athens resumed issuing.

A month later, President Hu Jintao visited Portugal and
offered “concrete measures” to help the debt-ridden euro zone
member but stopped short of promising to buy Portuguese bonds.

Chinese Vice Premier Wang Qishan said on Tuesday that
Beijing supported efforts by the EU and the International
Monetary Fund to calm global markets in the wake of Europe’s
debt crisis and said China had taken “concrete actions” to help
some European countries.

Later in the day, the Chinese commerce minister put the onus
more firmly on EU policymakers to act.

“We want to see if the EU is able to control sovereign debt
risks and whether consensus can be translated into real action
to enable Europe to emerge from the financial crisis soon and in
a good shape,” Chen Deming said. [ID:nTOE6BK01Q]
(Reporting by Shrikesh Laxmidas; editing by Mike Peacock)

UPDATE 1-China ready to buy 4-5 bln euros of Portugal debt-paper