Zhou gave no indication of whether China will change the currency composition of its reserve portfolio or shift it across different asset classes.

"We have had a very clear diversification plan for several years," he said on the sidelines of a European Central Bank conference in Frankfurt.

China's foreign exchange reserves are the world's largest, and continue to grow rapidly on the back of the country's massive trade surpluses and the central bank's efforts to control the yuan's exchange rate within a narrow band.

"We are considering lots of instruments (for diversification)," said Zhou, when asked whether China planned to shift its reserve portfolio away from US.Treasuries and into higher-yielding US corporate debt, as reported by a newspaper this week.

Following his comments, the dollar hit a two-month low against the euro at US$1.2848 while US government bond prices fell.

Gold and silver hit 2-month highs, while platinum prices jumped more than 3 percent on speculation that China might buy into precious metals.

A US Treasury Department spokeswoman declined to comment on Zhou's remarks. China is the second-biggest foreign holder of US Treasuries with US$339.0 billion as of August, according to Treasury Department data.

A shift away from dollar assets by China could put upward pressure on interest rates in the United States which has relied heavily on Asian purchases of its debt to finance its huge current account deficit.

Policymakers have worried this could destabilize financial markets and upset robust global economic growth.

"We have long warned against the diversification wave by global central banks in light of the peak in US interest rates and the need to diversify into other currencies and commodities that are boosted by steadying commodity prices," Ashraf Laidi, chief FX strategist at CMC Markets, said in a note to clients.

China, in order to hold down the yuan, has bought most of the dollars generated by its growing trade surplus -- which hit a record US$23.83 billion in October -- inflows of foreign direct investment and speculative capital.

Beijing has pledged to use its reserves in a responsible manner that will not destabilize global markets. Chinese central bank officials have said it is risky to hold as many dollars as it has now.

Zhou also said it was good that China's currency is moving in line with market supply and demand.

The yuan was revalued by 2.1 percent in July 2005 and cut loose from a dollar peg to float in tightly managed bands, and has gained about 3 percent since then.

Asked if he was satisfied with the yuan's appreciation, Zhou told Reuters: "It doesn't matter whether I am satisfied or not. It follows supply and demand (situation) in the market and it's good."

Asked if China was planning any more financial market reforms, he said: "Always."