WRAPUP 1-Greece denies China bond sale, markets dive

* Greece says there is no bond deal with China

* Greek/German bond spreads hit euro lifetime high

* Greece reiterates plan for investor roadshow in Asia, U.S.

* Data show room for Asians, Americans to expand holdings

* But China unlikely to take big risk with foreign reserves

By Dina Kyriakidou and George Georgiopoulos

ATHENS, Jan 27 (Reuters) - Greece on Wednesday denied press reports it had chosen Goldman Sachs (GS.N) to sell up to 25 billion euros ($35 billion) of bonds to China, sending Greek government debt prices sharply lower and hitting the euro.

Greece, facing a budget crisis, reiterated plans for an investor roadshow in Asia. But traders, who have been hoping for a major deal with China to ease Athens' problems, said the denial removed an important factor supporting Greek bonds.

The euro sank to a six-month low against the dollar and concerns about Greece helped push down European stocks, also boosting risk aversion that sent U.S. Treasury prices higher.

Greece's problems put a cloud over the outlook for Europe and its impact on global growth. Euro periphery markets also took a beating on Wednesday, as Portugal received a warning on its rating from Fitch on deficit concerns. [LDE60Q1GU]

"The ultimate fear is always contagion and the global recovery is fragile. So will it go to Portugal or Spain and so on?" said Scott MacDonald, head of research at Aladdin Capital in Stamford, Connecticut.

The Financial Times reported Greece was asking China to buy up to 25 billion euros of debt, with U.S. investment bank Goldman Sachs promoting the deal to Beijing. Dow Jones Newswires quoted an unnamed source as saying Greece was trying to place as much as 20 to 25 billion euros with Chinese investors.

But the Greek finance ministry said in a statement: "The Finance Ministry categorically denies that there is any deal to sell Greek bonds to China. The Finance Ministry has not mandated Goldman Sachs to negotiate any deal with China.

"The figures reported are not true," it added.

About 20 billion euros of Greek sovereign bonds will come due in April and May.

The spread of the 10-year Greek bond yield GR10YT=RR over German Bunds EU10YT=RR, a measure of the risk investors see in holding Greek debt, ballooned by as much as 69 basis points to 373 bps -- its highest level since Greece adopted the euro currency in 2001.

The decline erased market euphoria from Greece's sale of eight billion euros in five-year bonds on Monday, which caused optimism that it could finance its growing debts in 2010.

"The question of serviceability really remains," said Dan Cook, senior market analyst at IG Markets in Chicago. "It's kind of like if someone runs up their credit cards and can't pay them off so they just get a new credit card with a higher limit, only a higher interest rate as well."

Greek banks lost about 6 percent on funding fears, dragging Greek stocks down by nearly 4 percent.

However, billionaire investor George Soros said Greek debt "might" be worth buying -- although he does not trade -- as he said he was confident Greece will do whatever it needs to stay in the euro zone [ID:nLAE000040] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^