UPDATE 2-China boosting JGB buying amid euro crisis

(For more stories on the Japanese economy, click [ID:nECONJP])

* China buys $6 bln of JGBs in Jan-April -Japan MOF

* That is twice previous record for whole of 2005

* Country mainly bought short-term debt

* Europe’s sovereign debt woes behind China’s move -analysts
(Adds analyst quote)

By Tetsushi Kajimoto

TOKYO, July 6 (BestGrowthStock) – China has boosted its buying of
Japanese government bonds this year, snapping up a net $6 billion
of mostly short-term notes between January and April, double the
record amount logged for all of 2005, Japanese finance ministry
data showed on Tuesday.

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

The euro has sunk more than 14 percent against the dollar
this year, reflecting investor concerns over Europe’s debt
crisis.

“In general, when overseas central banks cannot hold European
sovereign debt it makes sense for them to instead choose JGBs,
which have high liquidity,” said Atsushi Ito, a strategist at
Morgan Stanley MUFJ Securities Japan.

“We already knew from other data that there has been overseas
demand for JGBs with durations of less than a year. Short-term
traders might react if China was among the buyers, but the
overall impact on the bond market is limited.”

Lead September 10-year Japanese government bond futures were
little changed on Tuesday, down 0.07 point at 141.50 (2JGBv1: ).

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. [ID:nTOE64Q04P]

Of the 541 billion yen ($6 billion) of JGBs purchased by
China in the first four months of this year, 517.7 billion yen
consisted of debt maturing in less than a year and 23.4 billion
yen was in medium- to long-term securities, the ministry data
showed.

In April, China bought a net 197.8 billion yen of JGBs, the
second-biggest after Britain among foreign buyers, the ministry
said.
($1=87.75 Yen)
(Additional reporting by Kaori Kaneko; Editing by Michael
Watson)

UPDATE 2-China boosting JGB buying amid euro crisis