Foreign Treasury holdings fell during debt debate

By MARTIN CRUTSINGER | September 16, 2011 | 9:10 AM EDT

WASHINGTON (AP) — The two biggest buyers of U.S. Treasury securities kept investing in July during a tense fight over raising the government's borrowing limit. But overall foreign holdings fell for only the second time in more than two years, a sign that some investors may have been worried about a possible default.

The Treasury Department's monthly report showed that China, the biggest buyer of U.S. Treasury debt, increased its investments for a fourth straight month. Japan, the No. 2 buyer, showed a gain after cutting holdings the previous month.

But Russia, India and the Caribbean banking centers, which includes the Bahamas and Bermuda, trimmed their holdings.

Total holdings dipped 0.4 percent to $4.48 trillion in July. That matched the 0.4 percent decline in April, which was the first decline in two years.