The U.S. government owes nearly a third more money to China than previously thought, the Treasury Department said on Monday as it revised Beijing's December holdings of U.S. Treasury debt sharply higher to $1.160 trillion.

The $268.4 billion increase over figures reported on February 15 was contained in a survey of foreign portfolio holdings of U.S. securities that provided fresh evidence that China has been buying Treasuries through broker-dealers in Britain.

The report's benchmark revisions attributed Treasuries holdings to China that were previously counted in other countries where the transactions were made, cementing Beijing's status as the largest U.S. creditor.

The Treasury report showed that UK December Treasuries holdings were revised downward to $272.1 billion from a previously reported $541.3 billion -- a nearly corresponding drop of $269.2 billion.

This provides the most substantive evidence to what has been previously suspected -- that China has been increasingly transacting through the U.K., said Alan Ruskin, global had of G10 foreign exchange strategy at Deutsche Bank in New York.

It does suggest that there's more commitment on the part of China to finance the U.S. current account deficit. On the downside is the perception that the United States is more beholden to the Chinese, he added.

However, it also means that China has an even bigger stake in Washington's ability to bring its deficits under control and avoid a major market decline in its debt prices.

Analysts and officials across the Group of 20 major economies say that China has had to purchase vast amounts of U.S. assets in to keep its currency from rising against the dollar.

While Beijing has allowed the yuan to rise about 3.8 percent since last June, the currency is widely viewed as undervalued, giving China an export advantage. U.S. Treasury officials say they believe China will allow the yuan to appreciate more quickly to control growing inflationary pressures.

The preliminary report on foreign portfolio holdings showed that China's total holdings of U.S. securities as of June 30, 2010, including Treasuries, stocks, asset backed securities and other long-term and short-term debt rose to $1.61 trillion from $1.46 trillion a year earlier.

Total U.S. securities held by all foreign countries on June 30, 2010 rose 11 percent to $10.701 trillion from $9.641 trillion a year earlier. At that time, Europe was still in the throes of a sovereign debt crisis that had prompted many foreign investors to seek the safety of U.S. assets.

The Treasury used the survey data through June 30, 2010, to identify the ultimate holders of its debt and make the benchmark revisions to its latest Treasury International Capital data.

Other major foreign holders of Treasuries showed much smaller revisions. December holdings by Japan, the second-largest U.S. creditor, declined just $1.3 billion to 882.3 billion. Holdings of oil-exporting countries, the number three group, fell $6.1 billion to $211.9 billion.

But December Treasuries holdings in Russia were revised sharply upward to $151 billion from $106.2 billion, putting it in eighth place behind Taiwan, which saw its holdings revised $23.2 billion higher, suggesting that both countries had made offshore purchases.

Canada, meanwhile, saw its December Treasuries holdings revised sharply lower to $76.8 billion from a previously reported $134.6 billion, suggesting that its banks also may be purchasing on behalf of buyers elsewhere.

(Reporting by David Lawder; Editing by Kenneth Barry and Diane Craft)

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