Just an ‘excuse’ for an oversold market that wanted to go up anyway.
Yes, China doesn’t want a weak euro for trade purposes.
But they don’t want to own the euro bonds either.

The fiscal tightening in the euro zone will do the work for them and strengthen the euro, even as it keeps growth and employment down, at least until the next funding crisis which could be a few weeks down the road or more.

No way to tell. My best guess is upside and downside of 10% or more for equities depending on which way the eurozone tips, with risk from a China slowdown remaining as well, and oil recovering in any case as it’s ultimately under (thinly disguised) Saudi control who do a pretty good job of making it look like market forces always move the price.

China Says Reports on Euro Holdings Review Groundless

May 27 (Bloomberg) — China said that a report that it’s reviewing foreign-exchange holdings of euro assets is “groundless” and the nation’s sovereign wealth fund said it’s maintaining its European investments.

“Europe has been, and will be one of the major markets for investing China’s exchange reserves,” the State Administration of Foreign Exchange said in a statement on its website today. The official Xinhua News Agency reported China Investment Corp. President Gao Xiqing said yesterday Europe’s turmoil “hasn’t had too big of an impact” on CIC’s investment decisions.