China has bought a stake in BP Plc, its second investment in a European oil company, as the nation seeks to boost returns on the world's largest foreign exchange reserves.

BP, Britain's largest company by market value, is aware a Chinese sovereign fund bought shares and welcomes the investment, spokesman David Nicholas said yesterday. The fund purchased just less than 1 percent of BP, worth about 1 billion pounds ($1.96 billion), the Daily Telegraph reported.

The BP stake added to Chinese investments in France's Total SA, Europe's third largest oil company, and Rio Tinto Group, the world's third-largest miner. China is buying assets across the globe as commodity prices rise to records and as its foreign currency reserves swell to $1.68 trillion.

"It could be the beginning of a wave of investments in major oil companies as oil prices keep racing higher," said Victor Shum, senior principal at energy consultant Purvin &Gertz Inc in Singapore. "It shouldn't raise any political concern, as the Chinese are not gaining management control. It's passive."

China Investment Corp, the nation's $200 billion sovereign wealth fund, last year spent more than $8 billion on stakes in Blackstone Group LP, manager of the world's largest buyout fund, and Morgan Stanley, the second-biggest US securities firm.

"We're aware of the Chinese shareholding, and we welcome all shareholders," said Nicholas. He declined to comment further.

Wang Xiaoya, a Beijing-based spokeswoman at China Investment, declined to comment on the report. Zhao Hongtao, a spokeswoman for China's $70 billion national pension fund, said the agency hasn't made such investments.

The UK government is aware of the stake-building by the fund, and is understood to be monitoring the situation closely, the Telegraph said, citing unidentified people in banking. The holding in BP, with a capitalization of 104 billion pounds, was bought over a period of time, according to the report.

The rising influence of State-owned capital pools has prompted the US and Europe to demand more transparency and disclosure. CNOOC Ltd, China's largest offshore oil explorer, was thwarted in August 2005 when US lawmakers helped block its $18.5 billion bid for Unocal Corp, citing threats to national energy security.