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Euro continues near 11-week dollar low Portugal denies it will need EU-led bail-out
(40 minutes later)
The euro remains near an 11-week low against the US dollar as European debt concerns continue to focus on Portugal. Portugal's government has reiterated that it will not need financial support from the European Union.
With the Portuguese government due to auction 500m euros ($651m; £418m) of bonds later, analysts are waiting to see the extent of market interest. The Portuguese Prime Minister, Jose Socrates, said that what the country needed instead was more confidence in its economy.
It comes a day after ratings agency Standard & Poor's placed Portugal on credit watch due to the country's huge debts. His comments come before a new bond auction by the government, with analysts waiting to see the extent of market interest.
Meanwhile, Portugal's central bank warned of the risks facing its banks. Despite concern at Portugal's debts, the euro rose in early trading.
It said they faced an "intolerable risk" if the government in Lisbon failed to consolidate public finances. Against the dollar, the euro was up slightly to $1.3020 from its Tuesday low of $1.2969 - its lowest level since 15 September.
In early Wednesday trading, the euro was up slightly to $1.3020 from its Tuesday low of $1.2969.
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.
Meanwhile, on the bond markets, the yield on Portuguese bonds was stable at 6.97%. Bank concern
The higher the yield, the less confidence investors have in the bond. 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.
The yield on German bonds remained around 2.67%. "And we need to do what we can do and should do."
With the Republic of Ireland 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. 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".