Portugal denies pressure from EU partners to agree bailout

SKELLY

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Portugal insisted this morning that it was under no pressure from its European Union partners to accept a multimillion euro bailout that could prevent the crisis in the eurozone spreading to its neighbour Spain.

After Financial Times Deutschland reported eurozone nations and the European Central Bank were urging Portugal to follow Ireland and capitulate to financial aid, the office of the Portuguese prime minister José Sócrates said it was "totally false" that the country was under such pressure.

Spain, whose borrowing costs have shot to alarming levels above 5%, also distanced itself from speculation that it wanted Portugal to agree a deal.

"What Spain wants is for Portugal to pass its budget and fulfil its stability programme," a source told Reuters.

Spanish prime minister José Luis Rodríguez Zapatero said this morning that investors were wrong to bet against Spain. "Those who are taking short positions against Spain are going to be mistaken," he said on RAC1 radio. He ruled out "absolutely" that Spain will need a bailout.

Amid signs that the attempts to agree a bailout for Ireland of between €85bn (£71.7bn) and €90bn is failing to restore confidence in the eurozone, the single European currency extended its losses in early trading. The euro fell to fresh two-month lows against the dollar of $1.3257.

Stock markets across Europe also tumbled, with the FTSE 100 in London dropping 46 points to 5652, a loss of 0.8%. Germany's Dax was down 0.6% and France's CAC fell 0.9%. Ireland's Iseq lost 0.4% and Spain's Ibex 1.2%, and Italy's benchmark index was down 1% in early trading.

European bond yields rose again this morning, with the yield – or rate of return – on 10-year bonds hitting 5.17% in Spain, 7.1% in Portugal, 8.99% in Ireland and 11.94% in Greece.

The anxious start to trading today followed what Gary Jenkins, head of fixed income research at stockbrokers Evolution, described as "another very worrying day for the EU".

He said that the "endgame" may be approaching if Spain's borrowing costs remain high.

"Whereas the financial woes of the likes of Ireland, Portugal and Greece are, to say the least, problematic they are manageable for the EU as a whole due to the size of their economies. However, if we continue to see the recent trend in Spanish bond yields continue then the crisis is going to be taken to a completely new level as Spain accounts for approximately 11.7% of eurozone GDP, which is pretty much double the figure of the aforementioned countries," Jenkins said.

"Thus it may well be that we are approaching the endgame of this part of the crisis as Spain is of such importance that one can only imagine that the EU will regard it as the line in the sand that cannot be crossed," he added.

hmmm, Seriously, where have I heard this before?
 


Berty

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Took the words from my mouth. It's the same old story out of the mouths of different people.
 

Berty

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I think the Portuguese are to vote on their budge today. Should be an interesting one.
 

Ethan Edwards

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Aug 11, 2010
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Ah! thats grand I was begining to worry this crisis could spread, but I am sure the Portuguese prime minister José Sócrates would not try to mislead his people, the worlds media or the markets whoever those faceless guys&gals are God blees'im, or withhold some of the story/truth, even make false claims. I wonder have the Portuguese turned a corner and their people are running to do their patriotic duty as our own BL put it. As my dear old grandmother used to say "alls well that ends well".
 

wellfkmepink

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Sep 23, 2010
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Will this put a stop to the pathetic and predictable "it could only happen in Ireland" rubbish. Meaning that most commentators will start dealing in facts and actual figures rather than rambling on about irrelevant side issues?

The issues I would see as relevant would be
1) The management of interest rates in a diverse economic and geographic region.
2) The complete miscalculation or blatant disregard for liquidity risk in financial markets.
3) The intrinsic link between fiscal and monetary policy. If control over one is surrendered it is imperative the other is managed impeccably. Fiscal policy driven solely by politicians is dangerous without access to monetary policy to quickly rectify big boo boos
 

DaveM

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hmmm, Seriously, where have I heard this before?
Put Brian Cowen under a sunbed for a few hours and maybe we can lend him to them as a spokesman!
 

eoghanacht

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We have til Sunday to default on the banking debt. Soon it will be out of our hands and we'll be behind Spain in the line for a bailout
 

A view from England

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We have til Sunday to default on the banking debt. Soon it will be out of our hands and we'll be behind Spain in the line for a bailout
The only way that Ireland will now default is if a run on the banks happens between now and them closing. Other than that it is only the politicians who can arrange to default. Can you see the politicans doing that/ They are all in the pockets of the EU and will obey their EU masters in order to protect the Euro. Game over.
 

collina

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So Portugal is the next target of Angela's blitz of small economies?
 


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