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China Fund Takes $2.8 Billion Stake in France's Total: FT

Reuters
Thursday, 3 Apr 2008 | 10:03 PM ET

The body that manages the bulk of China's $1.65 trillion in foreign exchange reserves has bought a $2.8 billion stake in France's Total, the Financial Times newspaper reported on Friday.

China's State Administration of Foreign Exchange, or Safe, began building its 1.6 percent stake in the French oil group, valued at 1.8 billion euros ($2.82 billion), several months ago, the newspaper said, quoting a person close to the company.

The investment was done with the full knowledge of Total -- the world's fourth-largest oil firm and France's biggest company by value -- and representatives of Safe are likely to have met Total's team, the person said.

Safe, which operates under the country's central bank, usually invests most of its funds in low-yielding securities, such as Treasury bonds and mortgage-backed securities, but the Financial Times said the falling U.S. dollar has also put pressure on it to diversify its portfolio.

A Total spokesman told Reuters on Thursday that a state-owned Chinese investment fund had been buying shares in the firm in recent months, but hadn't given a value or named the fund.