* Wen says supports stable euro
* Will not reduce holdings of European bonds
* Urges EU to recognise China's full market economy status
* Says China is still developing economy
(Adds background)
By Ingrid Melander and Harry Papachristou
ATHENS, Oct 3 (Reuters) - China pledged on Sunday to support a stable euro and not reduce its holdings of European government bonds in an effort to deflect criticism of its foreign exchange policy ahead of an EU-China summit this week.
China, at loggerheads with the United States over the yuan and likely to face similar complaints during his tour of European countries this week, emphasised its willingness to cooperate with the 27-nation EU..
"I have made clear that China supports a stable euro," Chinese Premier Wen Jiabao said during a visit to Greece at the start of a one-week European tour. "We will not reduce the holdings of European bonds in our foreign exchange portfolio," he added.
Wen, who offered on Saturday to buy an unspecified amount of Greek government bonds when debt-laden Athens resumes issuing, said on Sunday he was glad Greece was starting to emerge from the shadows of its debt crisis.
China has said it needs to diversify its foreign currency holdings and has bought Spanish government bonds. Chinese state entities have been generally conservative about investing in foreign financial markets and the Chinese government faces domestic political criticism over losses they incurred during the global financial crisis.
FREEING THE YUAN
At the height of the European debt crisis earlier this year, Chinese officials, concerned that the crisis could hurt the global economy, pressed European officials to take action to address the debt problem and restore confidence in the euro.
Beijing has rejected any international discussion of its own foreign exchange policy to date. It even blocked an attempt by G20 leaders in June to praise its decision to allow greater flexibility in the yuan's exchange rate.
Policy moves by the Chinese government to free the yuan from a dollar peg will help the Chinese currency rise, Dominique Strauss-Kahn, the head of the IMF said on Saturday.
Ahead of a China-EU summit on Oct 6, Wen urged the block to recognise China as a market economy, a status that would make it less vulnerable to anti-dumping charges under WTO rules.
In exchange, China offered to boost copyright protection and widen bilateral trade. "China commits to improving investment environment, to intensify copyright protection, widen bilateral trade and upgrade technology cooperation," he said in his speech in Greece's parliament through an interpreter.
But despite its growth, China remains an emerging economy, Wen said. "The basic reality of China, such as a huge population, a weak economic base, and unbalanced growth has not radically changed," Wen told parliament.
"Per capita GDP is just one eighth of Greece's and the percentage of population below the poverty line is three times that of Greece. China continues to be an emerging country."
Wen and his Greek counterpart George Papandreou said in a joint statement the world's nations need to coordinate economic policies for global recovery to find a sure footing..
"Global economic recovery is a journey with many turns and a full exit from it requires joint efforts," Wen said on Sunday. He made no comments on the yuan. On Saturday he said he was willing to work with the EU to confront the financial crisis and reform the international financial system.
He said he was confident Greece was on track to exit a debt crisis that shook the euro and said China wanted to boost cooperation with Greece, which faces its worst recession in decades.
"Greece is China's best friend in the EU," Wen said at a meeting with Greek opposition leader Antonis Samaras. Bilateral trade volume should double to $8 billion euros a year in 2015 with Greek traditional exports, such as olive oil, increasing.
"A few months ago, (we) signed an agreement to purchase 290 tonnes of Greek olive oil," Wen said. "Last night, for the first time in my life, I dipped a bite of bread in olive oil. It tasted very good." (Writing by Harry Papachristou; Editing by Jon Loades-Carter)