MercoPress. South Atlantic News Agency

China ready to support Euro rescue fund and held stabilize global markets

Presidents Hu Jintao and Sarkozy had a long conversation following the approval of the rescue plan

French president Nicolas Sarkozy conferred with his Chinese counterpart Hu Jintao as European policy makers seek to build support for an enlarged rescue fund designed to resolve the region’s sovereign-debt crisis.

Hu hopes that the measures will help to stabilize markets, state-owned China Central Television reported. The phone call between the leaders came hours after a Euro-region summit ended with an agreement to boost the European Financial Stability Facility to about 1.4 trillion Euros, leveraging existing guarantees by as much as five times.

Japan plans to support the increase, and is waiting to hear from European officials on details for the program, according to a person familiar with the matter.

Sarkozy’s outreach precedes the Group of 20 summit he will host next week, with Europeans seeking to bolster the role of the International Monetary Fund in overcoming the Euro-region’s woes. Australia’s finance chief said that while it’s “appropriate” to look at the IMF resources, Europeans must look to themselves first for bailout money.

The French president’s office said in a statement that Sarkozy and Hu “agreed to cooperate closely to ensure the G20 can make a decisive contribution to ensure growth and global stability.”

Sarkozy and Hu’s conversation came a day before a planned visit to Beijing by Klaus Regling, chief executive officer of the EFSF, to court investors. China has the world’s largest foreign-exchange reserves at more than 3.2 trillion dollars. Regling is also scheduled to visit Japan.

Japan, the world’s second-biggest holder of currency reserves, anticipates waiting until November for specification of how it may be able to help Europe, said diplomatic sources.

Finance Minister Jun Azumi said the European statement was a “big step forward,” speaking at parliament in Tokyo.

The EFSF, established last year to sell bonds to finance loans for distressed euro nations, has since also gained the authority to buy sovereign bonds on the secondary and primary markets, offer credit lines to governments and recapitalize banks as the Greece-triggered debt troubles have spread. The EFSF said Regling’s visit to China this week is linked to the fund’s original debt-issuance role.