Japan today said it was ready to buy bonds to be issued by the European Financial Stability Facility (EFSF) to help finance Ireland's bail-out and support the debt-hit eurozone.
Finance minister Yoshihiko Noda said Japan should help contribute towards boosting confidence in the bonds, amid fears of a deepening debt crisis spreading to other euro zone members such as Portugal.
In buying bonds Japan will join China, which has already expressed its readiness to assist European economies seen as most exposed to a debt crisis by pledging to buy bonds directly from Spain, Greece and Portugal.
'It is appropriate for Japan, a major country, to make a contribution, also in order to increase the bonds' credibility,' Noda told a news conference.
He added that Japan would be looking to buy more than 20% of the total offer of a planned issuance later this month, according to the Nikkei business daily. He also said that the government would use euro held in its foreign reserves to make the purchases.
The €440 billion EFSF was set up last year to preserve financial stability in the euro zone in the wake of the Greece crisis.
Bond markets have been tense as rates on debt issued by countries seen to be most at risk in the euro zone - led by Portugal - jumped sharply yesterday ahead of several critical bond sales this week.
Investors are concerned that when Spain and Portugal issue more debt this week they will have to offer exceptionally high interest rates to attract lenders.
The Portuguese bond auction is the focus of market attention this week after officials from other euro zone governments expressed concern that Lisbon might soon be forced to ask for a bail-out.
