Foreign demand for U.S. Treasury securities fell by the biggest amount on record in December, with China' holdings of bonds tumbling, allowing Japan to take over as the top holder of U.S. government debt, the Treasury Department said Tuesday. Foreign holdings of U.S. Treasury securities fell by $53 billion in December, surpassing the previous record drop of $44.5 billion in April 2009. Japan reduced its holdings of U.S. debt by $11.5 billion to $768.8 billion in December, but that amount was still more than China's December total of $755.4 billion, down from $789.6 billion a month earlier. The $53 billion drop in holdings of Treasury securities came mostly from a decline in official government holdings, which fell by $52.3 billion. The holdings of foreign private investors fell by $700 million in December. For all of 2009, foreign holdings of U.S. debt fell by $500 million. In 2008, foreigners increased their holdings of U.S. Treasury securities by $456 billion as a global financial crisis sparked investor flight to the safety of U.S. government debt. The flight to safer investments had driven down the interest rates that the U.S. government was paying on its debt to record lows. However, December's reduction in demand for U.S. debt, if it continues, could force the government to make higher interest payments at a time that it is running record federal budget deficits.