China bought several hundred million euros worth of Spanish bonds last Tuesday, the Financial Times reported, citing people familiar with the matter.
The report said China's State Administration of Foreign Exchange (SAFE), the central bank's arm that manages China's official currency reserves, was allocated as much as 400 million euros ($505 million) of Spanish 10-year bonds.
During the debt deal last Tuesday, demand rose to 14.5 billion euros in just a few hours, and SAFE ordered for about 1 billion euros, according to Financial Times.
Analyst think that China's purchase is a sign that Asian investors are regaining confidence over the eurozone market, which was forced into a hiatus by the Greece debt crisis.
SAFE expressed confidence in the European market last week, saying that Europe would remain one of the major markets for China's more than $2.4 trillion foreign exchange reserves despite the continent's sovereign debt woes.
"Europe was, is, and will be one of the major investment markets for China's foreign exchange reserves," SAFE said in a statement last Tuesday.
It was also reported that China has bought a net 735.2 billion yen ($8.3 billion) of Japanese bonds in May, more than doubling purchases for this year.
SAFE ruled out the option of dumping its vast holdings of US Treasury securities, and said the constantly adjusts of portfolio is to maximimize returns. Bankers say China's total holdings of dollar-denominated assets accounts for perhaps two-thirds of its reserves.
Growth of China's foreign exchange reserves are slowing as the total reached $2.4543 trillion by the end of June, up 15.1 percent year-on-year, the People's Bank of China (PBOC), the central bank, announced on Sunday.