The head of Europe's bailout fund sought financial support from China on Friday to help resolve the bloc's debt crisis, saying that while no quick deal was in sight he was still confident Beijing would keep buying bonds issued by his fund.

Klaus Regling, chief executive of the European Financial Stability Facility (EFSF), was in Beijing for talks with Chinese officials a day after euro zone leaders struck a hard-fought accord on the two-year crisis that nonetheless left major economies Italy and Spain under financial market pressure.

After the European summit in Brussels reached agreement in the early hours of Thursday, French President Nicolas Sarkozy immediately got on the phone to China to seek financial help, saying Beijing had a major role to play.

But despite a characteristically bullish sales pitch, the French leader did not appear to have received any specific commitments.

European governments had announced an agreement under which private banks and insurers would accept 50 percent losses on their Greek debt holdings in the latest bid to cut Athens' debt load to sustainable levels.

European leaders are now under pressure to finalize the details of the plan if they expect China and others to support it and Regling said he expected Beijing to continue buying bonds issued by the EFSF.

We all know China has a particular need to invest surpluses, Regling told a Beijing news conference, referring to the country's $3.2 trillion of foreign exchange reserves, the world's biggest.

Regling said the bailout deal with Greece was an exceptional case that he did not believe would have to be repeated for other nations.

Many in financial markets are concerned that the fund is not big enough to cope if Italy and Spain are drawn deeper into the crisis.

Italy's borrowing costs hit new euro-era highs at a bond auction on Friday. Prime Minister Silvio Berlusconi was forced to promise new reforms and counter speculation that his coalition government was about to collapse.

Despite Berlusconi's assertion that his center right alliance remains solid, critics contend that his reform promises do not go far enough and the country will face early elections next year with no significant progress to show.

France said investment by China would inspire confidence in the euro zone.

The reality is that China is the third largest shareholder in the International Monetary Fund, and if China via the IMF wants to participate - not by saving Greece or the euro - but by participating in investment, that is a gesture of confidence, French Finance Minister Francois Baroin said.

What is happening in Europe and creating instability is that public and private investors are pulling out, he told RMC radio.

Global stocks were heading for their best week in over two years on Friday, bolstered by the Brussels deal, while the euro hit a seven-week high at one stage before falling back, shrugging off the lack of detail in Thursday's anti-crisis plan.

Switzerland said it was looking at participating in the EU bailout fund via a special investment vehicle, although the idea could run into domestic opposition given the country's euro skeptical tradition.

Norway, however, whose $572 billion oil fund is Europe's biggest investor in equities, said it had less than 100 million euros in EFSF investments and would not invest in any euro zone rescue schemes that had elements of aid in them.

Key aspects of the euro zone deal, including the mechanics of boosting the EFSF and providing Greek debt relief, have yet to be finalized. It is proving difficult to explain in the meantime and European officials were jeered by journalists at one briefing as they struggled to outline it clearly.

There are fears that the latest deal will fall apart like the last one, three months ago, that was also meant to draw a line under the troubles of the 12-year-old currency bloc.

Within weeks it was clear that deal was inadequate given the scale of Greece's problems and the vulnerability of European banks. The new deal aims to plug these holes.

ABSOLUTELY SUSTAINABLE

Under it, the private sector agreed to voluntarily accept a nominal 50 percent cut in its bond investments to reduce Greece's debt burden by 100 billion euros, cutting its debts to 120 percent of gross domestic product by 2020, from 160 percent now.

The euro zone will offer 30 billion euros in credit enhancements or sweeteners to the private sector to get them on board. The aim is to complete these negotiations by year end, so Greece has a full, second financial aid program in place before 2012.

The value of that package, EU sources said, would be 130 billion euros -- up from 109 billion euros in the July deal.

The debt is absolutely sustainable now, Greek Prime Minister George Papandreou said.

In a bid to convince markets that they can defend larger countries like Italy and Spain, euro zone leaders also agreed to scale up the EFSF, the 440 billion euro bailout fund they created in May 2010 and have already used to provide aid to Ireland, Portugal and Greece.

Around 250 billion euros remaining in the fund will be leveraged 4-5 times, producing a headline figure of around 1.0 trillion euros.

The EFSF will be leveraged in two ways, either by offering insurance, or first-loss guarantees, to purchasers of euro zone debt in the primary market, or via a special purpose investment vehicle that will be set up in the coming weeks and which is aimed at attracting investment from countries such as China and Brazil.

The methods could be combined, giving the EFSF greater flexibility, the euro zone leaders said.

But EU finance ministers are not expected to define the plan until some time in November, with the exact date not fixed.

Another question mark is Berlusconi's commitment to shoring up his country's debt-laden economy. Dogged by scandals, Berlusconi has promised to raise the retirement age to 67 by 2026 and attempt other reforms, but the EU is reserving judgment after repeated backsliding from Rome in recent months.

SARKOZY TALKS TO HU

Sarkozy said he had spoken to Chinese President Hu Jintao by telephone after the summit on Thursday and that Hu was relieved Europe had announced a deal to tackle a crisis that could otherwise have taken down the entire world economy.

Sarkozy also donned the hat of euro salesman.

China has a major role to play. China must deploy more resources to stimulate the world economy: If they decide to invest in the euro rather than the dollar, why reject that?

Why not accept that the Chinese place their trust in the euro zone? the French president said.

China hopes all these measures will help stabilize the European financial market and conquer the current difficulties and promote the economic recovery and development, Hu said, according to China's state television. ($1 = 0.724 Euros)

(Writing by Giles Elgood; Editing by Ruth Pitchford)

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