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POLITICAL ECONOMY
Japan will keep buying EU bailout bonds: Regling
by Staff Writers
Tokyo (AFP) Oct 31, 2011


Japan has promised to keep buying eurozone bailout bonds, the head of the crisis fund told reporters on Monday, as the EU looks for outside help to solve its crippling debt problems.

The pledge will come as a relief to Klaus Regling, head of the European Financial Stability Facility, who came away empty handed from a mercy mission to Beijing last week.

"The Japanese government will continue to buy the EFSF bonds that we have been issuing," Regling said, Kyodo news reported.

Regling was speaking after meeting in Tokyo with Takehiko Nakao, Japan's top financial diplomat, on the latest stop of a tour widely believed to be aimed at shoring up support for the EU's efforts to stem a crisis that has sent ripples through the world economy.

Japan has so far purchased around 20 percent of the debt issued by the continent's bailout fund, and had indicated its willingness to buy more.

However, Dow Jones Newswires said officials had stopped short of guaranteeing they would maintain this level of support.

"I told (Regling) that we will continue to purchase EFSF bonds," one unnamed finance ministry official said, according to the agency.

After a marathon meeting in Brussels last week EU leaders announced measures including more than trebling the firepower of the fund to one trillion euros ($1.4 trillion) from 440 billion euros.

But with the European governments wary of putting more money into the fund, Regling was forced to look abroad.

He arrived in Tokyo over the weekend after a visit to Beijing during which China said it would seek more clarity before stumping up cash for the bailout.

On Friday Prime Minister Yoshihiko Noda offered vague promises that he would help Europe overcome its sovereign debt crisis, but gave no details on what form this help might take.

"During the upcoming G20 summit, I will map out Japan's contribution to settling down the global economic crisis sparked from Europe," Noda told parliament, referring to the gathering of global heads in France this week.

"Our determination and capacity as politicians is challenged at a time like this when a storm blown from Europe is ripping through global financial markets."

His remarks, in a policy speech, came after Japan's Finance Minister Jun Azumi said Tokyo was ready to take "necessary measures" to help revamp the eurozone in the interests of its own economy.

Japan, already stumbling to recover from the effects of the March earthquake and tsunami and the nuclear emergency they sparked at Fukushima, is facing further headwinds from the slowdown in global trade.

The country's vital export sector is also battling a stubbornly strong yen, hitting profits and threatening domestic production, as investors flock to the currency as a safe haven, pushing up its value.

On Monday, Japan intervened in the currency market for the first time since August to drive down the value of the yen after it hit yet another post-war high against the dollar.

Azumi told reporters that Japan's move was unilateral and did not comment on the size of the intervention, but one analyst predicted it had been bigger than the last intervention in August.

The dollar climbed to 79.40 yen at around 0630 GMT after hitting a low of 75.32 yen in Oceanian trade earlier Monday. The euro was at 111.08 yen from 107.06 yen struck earlier Monday.

Manufacturers have also been troubled by the uncertainty over Europe's persistent debt problems.

After 10 hours of tense talks in Brussels, Europe's leaders on Thursday thrashed out a deal aimed at providing new funds to Greece in a bid to stop the region's crippling debt troubles sparking another global financial meltdown.

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China's Hu kicks off Europe visit, amid euro crisis
Vienna (AFP) Oct 31, 2011 - China's President Hu Jintao arrived Sunday in Vienna for a state visit ahead of a crucial G20 meeting in France, amid hopes that Beijing may lend a helping hand to the debt-stricken EU.

Hu's visit to Europe, his second in a year, comes after EU leaders last week appealed to China to invest in the region's debt rescue fund to help it overcome a spiralling debt crisis.

Klaus Regling, the head of the bailout fund -- the European Financial Stability Facility (EFSF) -- also travelled to Beijing to strike a deal with the world's second-largest economy, reportedly seeking a pledge of $100 billion.

But while Hu welcomed a last-ditch agreement by EU leaders Thursday to tackle the crisis, Beijing has officially remained non-committal about its involvement.

On Friday, Vice Foreign Minister Cui Tiankai said the G20 summit, which Hu will attend in the French resort of Cannes on November 3-4, should focus on the sovereign debt crisis in "developed countries" and the growing pressure of global inflation.

Vice Finance Minister Zhu Guangyao however played down hopes of a breakthrough at the G20 meeting, insisting investment in the European bailout fund was not on the agenda.

Before Cannes, Hu and his wife Liu Yongqing are paying a two-day state visit to Austria with business and sight-seeing on the agenda.

The official visit begins Monday, when the couple will be received with military honours at the Imperial Palace by Austrian President Heinz Fischer and his wife Margit.

This will be followed by talks between the two leaders and the signing of bilateral agreements.

A state banquet and meetings with Chancellor Werner Faymann and parliament speaker Barbara Prammer were also planned.

Tuesday will be dedicated to sightseeing, with a visit to the scenic Salzkammergut region, a short lake cruise in St Gilgen, and a classical concert at the former Salzburg home of Wolfgang Amadeus Mozart.

Hu's visit to Austria, only the second by a Chinese president after Jiang Zemin in 1999, follows an invitation by Fischer, who travelled to Beijing last year, and comes as Austria and China celebrate 40 years of bilateral relations.

Foreign trade between the two countries amounted to 8.2 billion euros ($11.6 billion) in 2010, with imports up 21 percent and exports growing by 39.7 percent on the year.

China, which is reportedly sending a 160-strong delegation to accompany Hu, is especially keen on Austrian know-how in areas like infrastructure, transportation and environmental technology.

Vienna has meanwhile sent a stream of ministers to Beijing this year for talks and business deals, including Chancellor Faymann and Foreign Minister Michael Spindelegger, who also made a point of meeting political activists such as artist Ai Weiwei.

Sunday evening, the Tibetan community in Austria staged a minor protest near Hu's hotel and more were planned, including in Salzburg, during his stay.

Tight security was in place and parts of the city centre were also to be shut down.

Hu flies on to Cannes from Salzburg early Wednesday.



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China names new heads of financial regulators
Shanghai (AFP) Oct 30, 2011
China has appointed new chiefs of its three main financial regulators, state media reported, in a periodic shuffle of officials by the ruling Communist Party. The moves comes as China struggles with slowing economic growth and persistently high domestic inflation, which has prompted the government to keep a tight grip on credit. Shang Fulin will become head of the China Banking Regulator ... read more


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