LONDON — The euro, which was slammed this year by the eurozone debt crisis, edged higher against the dollar on Thursday in muted pre-Christmas trade, as dealers digested a fresh message of support from China.
In morning deals, the European single currency rose slightly to 1.3102 dollars, compared with 1.3095 late in New York on Wednesday.
Markets in Japan were closed for a public holiday, while trading was subdued elsewhere ahead of the festive break.
China on Thursday pledged its backing to eurozone countries amid an ongoing debt crisis and said Europe would be a "major market" for investment of Beijing's massive foreign exchange reserves.
"We are ready to support the eurozone countries to overcome the financial crisis and realise economic recovery," foreign ministry spokeswoman Jiang Yu told reporters at a regular briefing.
"In the future, the European Union will be one of the major markets for our forex investment."
China has emerged as a key player in the European debt crisis. Beijing has the world's largest foreign exchange reserves at 2.648 trillion dollars, a significant portion of which is invested in the euro.
At annual Sino-EU trade talks this week, Chinese Commerce Minister Chen Deming expressed concern about Europe's debt crisis and said Beijing was looking to EU policymakers for "real action" to keep the 27-nation bloc on course.
"We are very concerned about whether the European debt crisis can be controlled," Chen told reporters in Beijing on Tuesday.
"We want to see if the EU is able to control sovereign debt risks and whether consensus can be translated into real action to enable Europe to emerge from the financial crisis soon and in a good shape," he added.
In October, China pledged to back Greece, which nearly defaulted this year when investors snubbed its debt, by buying its bonds in future debt issues.
During a visit to Lisbon last month, Chinese President Hu Jintao pledged to help Portugal handle its fiscal crisis but Beijing has not yet made firm promises regarding the purchase of Portuguese government debt.
Last week, EU leaders pledged to defend debt-plagued eurozone nations with a permanent bailout mechanism from mid-2013 -- the successor to a temporary, International Monetary Fund-backed trillion-dollar facility.
Greece and Ireland have been bailed out by the EU and the IMF. Portugal, Spain, Belgium and even Italy are considered at risk by experts going into 2011.
In London on Thursday, the euro changed hands at 1.3102 dollars against 1.3095 dollars late in New York on Wednesday, at 108.69 yen (109.45), 0.8516 pounds (0.8511) and 1.2487 Swiss francs (1.2467).
The dollar stood at 82.94 yen (83.55) and 0.9528 Swiss francs (0.9520).
The pound was at 1.5386 dollars (1.5382).
On the London Bullion Market, the price of gold fell to 1,382.80 dollars an ounce from 1,387 dollars late on Wednesday.
