* Geithner says yuan reform "of course is China's choice"
* Says China to lower investment barriers in key sectors
* Confident Europe can manage fallout from debt crisis
By Glenn Somerville
BEIJING, May 25, (Reuters) - U.S. Treasury Secretary Timothy Geithner on Tuesday welcomed a pledge by China's top leaders to pursue currency reform as part of a broader agenda aimed at boosting domestic consumption and helping rebalance global growth.
In a statement at the close of a two-day Strategic and Economic Dialogue, Geithner said letting markets have more sway on currency values will benefit China by giving it more tools to keep inflation contained.
He also cited progress in persuading Beijing to let U.S. firms compete more equally in Chinese markets.
He said the discussions with Chinese leaders on the yuan were encouraging but wouldn't speculate when Beijing might let its yuan rise in value as American lawmakers are demanding it do.
"This is of course China's choice," he said in the statement.
In a round of television interviews, Geithner was asked how he interpreted remarks Chinese President Hu Jintao's remarks on Monday that it will continue exchange rate reform at its own pace.
"Encouraging, promising," Geithner said on Bloomberg Television. ""But again, I'm going to leave it to them to characterize what their plans are."
U.S. politicians and some business groups maintain that China keeps its yuan at an artificially low level that gives its products an unfair price advantage in America's consumer markets.
The yuan had risen about 21 percent between 2005 and mid-2008 when Beijing repegged it to try to add stability during the turmoil stemming from the global financial crisis.
Geithner said he was "as confident as I've ever been" that China will see that it is in its own interest to let the yuan, also called the renminbi, resume appreciating.
Throughout his visit to China, Geithner has stressed that a recovery in the United States and elsewhere has been gathering steam, indirectly suggesting that China no longer had as strong of a case for maintaining the currency peg.
Asked about U.S. objections to Chinese industrial policies aimed at promoting domestic high-tech leaders, Geithner said he was hopeful that Beijing would be "sensitive and responsive" to concerns that its so-called "indigenous innovation" policies might discriminate against U.S. companies.
"But let me just say American companies are doing very well in China. What they're concerned about is to make sure that going forward, they're going to compete on a level playing field," he said.
Geithner heads for Britain and Germany on Tuesday night, where he will discuss European efforts to stabilize its financial markets in the wake of a debt crisis that has made investors edgy about the region and driven down the euro's value.
"I'm completely certain that Europe has the ability to manage this," Geithner said. The European Union has agreed on a trillion-dollar package to deal with financial strains in the region if necessary and, in conjunction with the International Monetary Fund, put together a bailout package for financially strapped Greece.
In an interview with Fox Business Network, he said that what was necessary now was to put the support measures in place.
"The most important thing is that Europe act with force and care and speed...," Geithner said.
He repeated, as he had earlier to a group of middle-aged students at a school that trains future regional leaders, that the Obama administration is committed to lower record budget deficits -- though only after it is certain economic recovery is assured.
"It's critically important to the United States, important to the strength of recovery and to future U.S. growth, that we act to bring our deficits down quickly and substantially as the economy strengthens, " he said.
Geithner meets Britain's new Chancellor of the Exchequer, George Osborne, in London on Wednesday and then travels on to Frankfurt to meet European Central Bank President Jean-Claude Trichet. On Thursday, he flies to Berlin for a meeting with German Finance Minister Wolfgang Schaeuble before returning to Washington.
(Additional reporting by Doug Palmer; Editing by Ken Wills)