The head of Europe's bailout fund, in Asia on a tour for potential investors, said Monday he had been reassured by Japan's top currency official that Tokyo would continue to buy its bonds.

Europe is looking to countries with big foreign exchange reserves, such as Japan and major emerging economies, to provide the extra financial firepower to strengthen the fund four- to five-fold, to about 1 trillion euros.

Japanese policymakers have in the past indicated that Tokyo would be willing to buy more bonds issued by the European Financial Stability Facility, but that it wanted to see Europe taking decisive steps to contain its sovereign debt crisis.

The Japanese government will continue to buy the EFSF bonds that we have been issuing over the last 10 months and we will continue to be in contact about future operations, Klaus Regling told reporters after a meeting with Takehiko Nakao, Japan's vice finance minister for international affairs.

Regling was in Tokyo after courting China over the weekend, trying to entice Beijing to invest by saying investors may be protected against a fifth of initial losses and that bonds could eventually be sold in yuan if Beijing desires.

His pitch drew a very cautious response from China.

The EFSF chief executive travelled to Asia after European leaders on Thursday struck a hard-fought accord aimed at tackling the two-year crisis.

A key element of the agreement is to leverage the EFSF to 1 trillion euros, though Europe has yet to work out the details of the plan and European governments remain wary of pledging more money.

Market economists have been calling for a rescue fund with twice the resources under discussion in Brussels, and the deal failed to ease the bond market pressure on major economies Italy and Spain.

One idea is for boosting bailout fund is to offer insurance, or first-loss guarantees, to those buying euro zone debt in the primary market.

Another is to set up a special purpose investment vehicle aimed at attracting investment from cash-rich emerging powerhouses such as China and Brazil.

Japan holds about 2.7 billion euros, or 20 percent, of the total bonds issued by the EFSF after it purchased them in January and June. But it is not clear whether it would be interested in investing in the new special vehicle.

Beijing, which holds the world's largest foreign exchange reserves of some $3.2 trillion, has shown caution so far. Even though China has expressed confidence that Europe can overcome the debt crisis, it has made no public offer to buy more European government debt.

Pledges of more money for the European rescue vehicle could materialize at a G20 leaders summit in France on Thursday and Friday.

(Reporting by Tetsushi Kajimoto; Writing by Tomasz Janowski and Alex Richardson; Editing by Kavita Chandran)

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