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Portugal denies it will need EU-led bail-out | |
(40 minutes later) | |
Portugal's government has reiterated that it will not need financial support from the European Union. | |
The Portuguese Prime Minister, Jose Socrates, said that what the country needed instead was more confidence in its economy. | |
His comments come before a new bond auction by the government, with analysts waiting to see the extent of market interest. | |
Despite concern at Portugal's debts, the euro rose in early trading. | |
Against the dollar, the euro was up slightly to $1.3020 from its Tuesday low of $1.2969 - its lowest level since 15 September. | |
Against the pound, the euro was at 0.8377 pence, compared with Tuesday's close of 0.8366. | Against the pound, the euro was at 0.8377 pence, compared with Tuesday's close of 0.8366. |
Bank concern | |
In a Portuguese radio interview, Mr Socrates said: "I do not see any reason to change the position of the Portuguese government which is very clear: we do not need any help, what we need is confidence in the Portuguese economy. | |
"And we need to do what we can do and should do." | |
Lisbon's 500m euros ($651m; £418m) bond auction comes a day after ratings agency Standard & Poor's placed Portugal on credit watch because of the country's huge debts. | |
Portugal's central bank has also warned of the risks facing its banks. | |
On Tuesday, the central bank said they faced an "intolerable risk" if the government in Lisbon failed to consolidate public finances. | |
Standard & Poor's said Lisbon may not be doing enough to enact "growth-enhancing reforms", adding that it had done "little to boost labour flexibility and productivity". | |
Portugal, which approved an austerity budget for 2011 last week, is struggling to meet its targets for deficit reduction. | |
With the Irish Republic getting a European Union-led bail-out last week, the concern in some quarters is that Portugal may be the next country that needs assistance. | |
"The general feeling is that this is a mess that is not going to be easily escaped," said analyst Robert Ryan of BNP Paribas in Singapore. | "The general feeling is that this is a mess that is not going to be easily escaped," said analyst Robert Ryan of BNP Paribas in Singapore. |
'Determination' | |
On the bond markets, the yield on Portuguese bonds was stable at 6.97%. | |
The higher the yield, the less confidence investors have in the bond. | |
The yield on German bonds - which are considered the safest - remained about 2.67%. | |
On Tuesday, the president of the European Central Bank, Jean-Claude Trichet, tried to calm nerves over high eurozone debt levels. | |
He said that both Greece and the Irish Republic were solvent, insisting that the eurozone economy was "functioning" and had grown by more than expected this year. | |
Mr Trichet said that "observers are tending to underestimate the determination of the (eurozone) governments and the EU as a whole". |