metal report

China’s role in the Euro is becoming increasingly important as the evidence suggests that it is becoming a key strategic player in the Euro-zone markets. During the European session on Tuesday when markets were threatened by collapse, there was a sudden reversal as yield spreads narrowed, stock-markets rallied and the Euro recovered by close to 200 basis points from lows. There were strong rumours that China was aggressively buying Euro-zone debt. China is certainly looking to diversify away from the dollar and it also has a key interest in the Euro-zone industrial sector, especially given the insatiable appetite for European up-market cars. In this context, China is certainly prepared to play the long game, but it will only look at long-term peripheral debt holdings after they have devalued