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| Global financial markets rise amid bail-out rumours | Global financial markets rise amid bail-out rumours |
| (40 minutes later) | |
| World stock markets and the euro have surged amid reports that Washington may join Europe in further support for heavily indebted countries. | World stock markets and the euro have surged amid reports that Washington may join Europe in further support for heavily indebted countries. |
| The US Treasury has sent an envoy to Europe to discuss the continuing financial crisis. | The US Treasury has sent an envoy to Europe to discuss the continuing financial crisis. |
| It follows comments from European Central Bank chief Jean-Claude Trichet that people should not "underestimate" the eurozone's "determination" to act. | It follows comments from European Central Bank chief Jean-Claude Trichet that people should not "underestimate" the eurozone's "determination" to act. |
| Meanwhile, Portugal's PM has insisted that Lisbon does not need a bail-out. | Meanwhile, Portugal's PM has insisted that Lisbon does not need a bail-out. |
| Germany's Dax stock index led European markets higher, rising 2.6%, with the FTSE 100 up 2%, ending days of losses. Wall Street opened more than 2% up. | Germany's Dax stock index led European markets higher, rising 2.6%, with the FTSE 100 up 2%, ending days of losses. Wall Street opened more than 2% up. |
| In mid-day trading in New York, the euro jumped to $1.3140, up from $1.3011 on Tuesday. | In mid-day trading in New York, the euro jumped to $1.3140, up from $1.3011 on Tuesday. |
| Envoy | Envoy |
| Investors' confidence was boosted by a belief that central banks are ready to inject more funds into European economies to resolve the sovereign debt crisis. | Investors' confidence was boosted by a belief that central banks are ready to inject more funds into European economies to resolve the sovereign debt crisis. |
| Treasury Secretary Timothy Geithner has sent Lael Brainerd, the department's top official on international matters, for talks with European officials. | Treasury Secretary Timothy Geithner has sent Lael Brainerd, the department's top official on international matters, for talks with European officials. |
| Mr Brainerd had meetings in Madrid on Wednesday and was scheduled to be in Berlin on Thursday and Paris on Friday. | Mr Brainerd had meetings in Madrid on Wednesday and was scheduled to be in Berlin on Thursday and Paris on Friday. |
| The US "can't afford to let Europe implode", said David Gilmore, analyst at Foreign Exchange Analytics. | The US "can't afford to let Europe implode", said David Gilmore, analyst at Foreign Exchange Analytics. |
| Speculation that the European Central Bank (ECB) plans to expand its government bond repurchase scheme began after a speech by Mr Trichet on Tuesday evening. | Speculation that the European Central Bank (ECB) plans to expand its government bond repurchase scheme began after a speech by Mr Trichet on Tuesday evening. |
| The ECB has spent 67bn euros (£56bn; $88bn) on purchases so far, and markets are now waiting to see if the governing council announces that it is expanding the programme following its rate-setting meeting on Thursday. | |
| After the Republic of Ireland's bail-out, debt concerns have moved to Portugal. | After the Republic of Ireland's bail-out, debt concerns have moved to Portugal. |
| Prime Minister Jose Socrates insisted that the country did not need bailing out. What the economy needed, he said, was "confidence". | Prime Minister Jose Socrates insisted that the country did not need bailing out. What the economy needed, he said, was "confidence". |
| He said in a radio interview: "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." | He said in a radio interview: "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." |
| 'Expensive' bonds | 'Expensive' bonds |
| Lisbon's latest bond auction was successful on Wednesday, but the yield it has had to offer investors has risen sharply, indicating declining confidence in country's finances. | Lisbon's latest bond auction was successful on Wednesday, but the yield it has had to offer investors has risen sharply, indicating declining confidence in country's finances. |
| The sale of 500m euros worth of one-year bonds was two and a half times oversubscribed. | The sale of 500m euros worth of one-year bonds was two and a half times oversubscribed. |
| The yield rose to 5.3%, which BBC business editor Robert Peston said was "hugely expensive" for one-year bonds. | The yield rose to 5.3%, which BBC business editor Robert Peston said was "hugely expensive" for one-year bonds. |
| Bonds are effectively loans, in this case made by investors to governments. | Bonds are effectively loans, in this case made by investors to governments. |
| The higher the yield of a bond at auction, the riskier investors think that loan is, so the government has to offer them a higher rate of return to ensure it attracts enough buyers. | The higher the yield of a bond at auction, the riskier investors think that loan is, so the government has to offer them a higher rate of return to ensure it attracts enough buyers. |
| The previous release of one-year Portuguese bonds had a lower yield of 4.8%. | The previous release of one-year Portuguese bonds had a lower yield of 4.8%. |
| While the latest auction was oversubscribed, our business editor also questioned how many of the government bonds were bought by Portuguese banks funded by the European Central Bank. | While the latest auction was oversubscribed, our business editor also questioned how many of the government bonds were bought by Portuguese banks funded by the European Central Bank. |
| Bank fears | Bank fears |
| Portugal's central bank has warned of the "intolerable risk" facing its banks if the government failed to consolidate public finances. | Portugal's central bank has warned of the "intolerable risk" facing its banks if the government failed to consolidate public finances. |
| Lisbon, which approved an austerity budget for 2011 last week, is struggling to meet its targets for deficit reduction. | Lisbon, which approved an austerity budget for 2011 last week, is struggling to meet its targets for deficit reduction. |
| Our business editor said Portuguese officials had told him it was now "not a question of if there will be a bail-out, but when". | Our business editor said Portuguese officials had told him it was now "not a question of if there will be a bail-out, but when". |
| He added that Portugal was in a "perilous" position, because Portuguese banks were lending the government billions of euros that they had borrowed from the European Central Bank. | He added that Portugal was in a "perilous" position, because Portuguese banks were lending the government billions of euros that they had borrowed from the European Central Bank. |
| Camilo Lourenco, a Portuguese economic commentator, also appeared to agree that Portugal would need assistance, saying the country might need to go into "quarantine". | Camilo Lourenco, a Portuguese economic commentator, also appeared to agree that Portugal would need assistance, saying the country might need to go into "quarantine". |
| He told RTP Internacional, the international TV channel of Portugal's public broadcaster: "We are in a group and we are married to 16 countries. | He told RTP Internacional, the international TV channel of Portugal's public broadcaster: "We are in a group and we are married to 16 countries. |
| "Some people in this family are not well, they have a contagious disease, and the most likely scenario is that those who are not sick want to set up a quarantine room to put the sick people in. | "Some people in this family are not well, they have a contagious disease, and the most likely scenario is that those who are not sick want to set up a quarantine room to put the sick people in. |
| "Portugal is a very strong candidate, as is Spain and probably even Italy." | "Portugal is a very strong candidate, as is Spain and probably even Italy." |