But looking forward, managers say that European bonds represent the best value of debt securities anywhere in the world.

Compared to other global markets, European convertible bonds tend to be of high credit quality.

"Our view would be that if you take a three-to-six-month view, European bonds offer the best value," he said.

The European bonds are to mature between 1992 and 1995.

European bonds got a lift when hopes that Germany would cut interest rates were revived.

For the longer term, his portfolio is now heavily weighted toward European bonds maturing in three to seven years, he said yesterday.

While it seems way out for the Fed to buy European bonds, it may well be the best possible investment.

Other investors have taken big hits this month, particularly those who owned European bonds, which have suddenly tumbled in value.

Nevertheless, they, too, then had to sell some of their European bonds to cover their own margin calls.

There are a number of international fixed interest unit trusts available, although they do not necessarily specialise entirely in European bonds.