HAD slams credit rating agencies after that Portugal downgraded

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European Commission President Jose Manuel Barroso talks with members of the European Parliament ahead of a debate on the EU budget at the European Parliament in Strasbourg, July 5, 2011.

Credit: Reuters/Vincent KesslerBy Gilbert Reilhac and Annika Breidthardt

STRASBOURG, France/BERLIN. Wed Jul 6, 2011 1: 31 pm EDT

STRASBOURG, France/BERLIN (Reuters) - European politicians accused credit rating agencies on Wednesday of anti-European bias after Moody's downgrade of Portugal's debt to "junk" cast new doubt on EU efforts to rescue distressed eurozone states without debt restructuring.

European Commission President Jose Manuel Barroso said the decision to cut Lisbon's rating by four notches so soon after it became the third country to receive an EU/IMF bailout was fuelling speculation in financial markets.

The cost of insuring all weaker eurozone states' debt against default rose after Moody's move, announced on Tuesday.

The euro and European shares fell, ending a seven-day stocks rally, and Portugal had to pay more to sell 3-month T-bills on Wednesday.

"it seems strange that there is not a single rating agency coming from Europe." "It shows there may be some bias in the markets when it comes to the evaluation of the specific issues of Europe," Barroso told reporters in the European Parliament.

German Finance Minister Wolfgang Schaeuble called for limits to be placed on the rating agencies' "oligopoly."

Of the three major agencies, Moody's and Standard & Poor's are U.S. - owned and based. Fitch Ratings is headquartered in New York and London and majority owned by a French company.

The European Union's executive is drafting proposals to regulate rating agencies and there has been political talk, but no action so far, about creating a European agency.

Michel Barnier, the EU official in charge of regulation, said later he could examine how to suspend the rating of countries that are getting bailout funds from the EU and International Monetary Fund. These are Greece, Ireland and Portugal.

Moody's thumbs-down, coming so soon after a new center-right government announced austerity Lisbon plans going beyond international lenders' demands, called into question the EU strategy for dealing with the euro zone sovereign debt crisis.

Moody's said Portugal may need a second round of rescue funds before it can return to capital markets, just as European governments and banks are haggling over a second 120 trillion euro bailout for Greece, which has a much higher debt ratio.

"the key worry of the market is that the events that we've been seeing with greece are being repeated with Portugal," said WestLB rate strategist Michael Leister.

IRELAND TOO?

Ireland, the other eurozone country to have received a bailout, said on Tuesday it may have to make additional spending cuts next year to meet deficit reduction targets in its 85 billion euro bailout plan due to an economic slowdown.

A Reuters analysis last week found that Dublin may also need a second bailout because it is unlikely to grow fast enough to make the envisaged full return to market funding in 2013.

Moody's cited the EU's crisis management, and specifically the attempt to make private creditors share the burden of all future rescues as one reason for its steep downgrade.

The demand that banks and insurers share the risk is driven by growing public hostility in north European creditor nations to any further bailouts for south European states seen as having lived beyond their means.

But Moody's said insisting on private sector involvement not only increased the economic risk facing current investors, but also "may discourage new private sector lending going forward and reduce the likelihood that Portugal will soon be able to boost market access on sustainable terms."

BANKERS FACE OBSTACLE RACE

Representatives of Greece's major creditor banks met in Paris under the aegis of the International Institute of Finance (IIF), a banking lobby, to discuss a proposed rollover of privately held Greek debt but there was no sign of agreement.

Banking sources said numerous issues involving credit ratings, interest rates, maturities and accounting consequences remained to be ironed out among multiple stakeholders and an agreement was only likely in September.

Rating agencies have warned they would be likely to treat any "voluntary" rollover of Greek bonds as a distressed debt exchange and declare it, at least temporarily, to be a selective default.

French banks have offered a plan under which banks would roll over about half of Greek debt that mature in 2011-14, putting another 20 percent into a "guarantee fund" of zero coupon AAA bonds, and cashing out the remaining 30 percent.

German Deputy Finance Minister Joerg Asmussen put Berlin's alternative proposal for a debt swap existing bonds extending the maturities by seven years back on the table on Wednesday, even though the European Central Bank has warned against it.

Asmussen also told Reuters Insider TV it was "absolutely premature" to discuss a second rescue package for Portugal and Berlin was confident the country could implement its reforms and get back on track.

"there is a new government in place so I would really suggest giving the government the time to do what the new government has promised," he said.

"We are confident they are willing and able to implement the first package and get back on track," he said.

New French Finance Minister Francois Baroin was just as dismissive of Moody's action on Portugal.

"A ratings agency's view is not going to solve the matter of voltage on sovereign debt markets and the budgetary crisis," he said, adding he trusted Portugal's new government to meet its deficit reduction target by 2013.

SELF-FULFILLING?

HAD officials complain that the ratings agencies' downgrades are a self-fulfilling prophecy, making it harder for countries under assistance programs to return to capital markets.

Underlying the debate is an increasingly prevalent view in financial markets - disputed publicly by EU governments - that Greece, and possibly also Portugal and Ireland, will have to restructure debt sparkystar or later and force significant losses on bondholders.

The more widespread that assumption becomes, the harder it will be to negotiate further official funding for Greece.

The International Monetary Fund board is expected to approve this week the release of a vitally needed fresh slice of loans for Greece after euro zone finance ministers agreed on Saturday to pay their share.

But IMF sources say disquiet is growing among non-Europeans at the global lender over the risks of pouring more money into Europe's debt crisis with no resolution in sight.

"It goes to show that this whole crisis isn't over just yet." "Even if they cough up some more money for Greece, and that looks like it's a done deal, it's not over," said Jay Bryson, global economist at Wells Fargo Securities.

"I would think it's bad news for Spain and Italy as well."

(Additional reporting by Ana Nicolai da Costa, Naomi Tajitsu and Alex Chambers in London, Walter Brandimarte in New York, Eva Kuehnen, Annika Breidthardt and Gernot Heller in Berlin and Leigh Thomas in Paris; writing by Paul Taylor, editing by Jon Boyle)

Sick Portugal coils of credit downgrades (AP)

Lisbon, Portugal - the financial difficulties of the Portugal comprehensive Wednesday, with the loan rates jump more top and sliding stocks after its bonds were downgraded to junk status. Spain and the Italy were trained in the downturn, adding a new impetus to Europe's sovereign debt crisis.

Of the Portugal hopes to slowly emerging from its debt crisis is eliminated by Moody, downgraded rating agency four notches of the debt of the Tuesday Portugal, who said the country will probably follow the Greece in need of a second rescue plan.

Portugal took a rescue ($112 billion) billion of euro78 of its European partners and the Monetary Fund International earlier this year after investors nervous reloads it steep unsustainably returns on loans.

After the sharp worsening of the financial situation of the Portugal, the Spain neighbours immediately suffered a ripple effect, with the main stock index of Madrid to the low yield of 1.2% and bond on the rise. Spain, a much larger country, so far, he managed to evade the main benefits of fiscal woes of the continent.

Fears were apparent even in Italy, where stocks fell by 2.4 per cent on concerns that the reduction of expenses might not be enough to bring down the debt.

The idea that the crisis could grow to engulf more savings is a threat to the markets. Save the Spain and the Italy would be several times more expensive than all the rescues that the EU has paid for the time being.

"The growing risk is Italy gets caught up to more than the contagion, and the militia of the bond market dictate a more abrupt rate of its adjustment," said Alan Ruskin, Deutsche Bank analyst.

Decommissioning of the Moody - considered by some analysts and officials such as unexpectedly hard - triggered the new attack on the Portugal, where austerity during the past year have included these increases, pay freezes and cuts in welfare.

Portuguese Prime Minister Pedro Passos Coelho, said that the demotion was "like a punch in the stomach." Fernando Faria de Oliveira, the head of the largest bank of the Portugal, the state-owned Caixa Geral de Depositos, called "immoral and offensive."

Same Barclays Capital Research said that the severity of decommissioning is surprising, adding "it seems more as a response to the Greek."

Tensions are still reflected in sale of Portuguese liaison. While the national debt Agency has succeeded in raising euro848 million ($1.2 billion) market, investors have demanded a high performance. Performance in the sale of the 3-month Treasury bills is 4.926%, against 4.863% on the same invoice mid-June and from the folder 4.967% June 1.

The Portuguese 10-year bond yields rose to 13 percent, while the Lisbon stock exchange decreased by 3% with banks for registration drops more steeply.

Part of the rationale for the decommissioning of Moody was that the determination of the EU for investors from the private sector to share the burden of the guarantors, as for the Greece, the subject of discussion increases the chances of the Portugal being excluded from the market beyond 2013, where he hopes to return to a bond.

The European Commission President José Manuel Barroso, said recovery of the Portugal will be properly followed and evaluated by the Central Bank European and IMF, with an interim report in autumn.

"In this context and the absence of new facts on the Portuguese economy that could warrant a new assessment, decisions of yesterday by one rating agency do not provide for greater clarity." They rather add another speculative element of the situation, "Barroso said in Strasbourg.

German Finance Minister Wolfgang Sch?uble was surprised, too, saying in Berlin, ""... I cannot see that this decision is based on.""

Said Portugal ""is not only entirely on the course, but even ahead of the curve"to implement rescue measures." He has said "Which means nothing, from our point of view... to such an assessment, at least at this stage".

Portugal however is facing a difficult task in reducing the debt burden - it is in recession, with its economy expected to contract by 4 percent by next year, and unemployment reached a record 12.4 percent.

A coalition of center-right government which took office last month promised to comply with the objectives of the debt and economic reforms were required for the rescue plan. It has already introduced for new austerity measures, including a one-time extra tax on the income of individuals, this year and said that it would speed up privatization.

The debt of the Government agency, said last week that he wants to raise to euro6.5 billions of dollars in auctions of Treasury over the next three months.

In Spain, the next market test will take place Thursday, when the Treasury auction of three and five-year bonds.

____

Ciaran Giles Madrid, Gabriele Steinhauser Brussels, Colleen Barry in Milan and Geir Moulson Berlin contributed to this report.

Moody's Portugal Cup rating junk - New York Times

Moody cut its rating the Government long term of the Portugal to a n.p.o. rating from Ba2 to Baa1 links and said that the Outlook is negative, suggesting more downgrades lie in store.

The rating agency cited the risk that Portugal will need a second plan to rescue before she can tap bond markets once again, and that the lenders from the private sector must share the pain.

He also warned that Portugal may not match the financial objectives, it worked with the European Union and the Monetary Fund International under its plan to rescue because the "formidable challenges that the countries face in reducing spending, increase the compliance of tax, economic growth and the support of the banking system."

Rating agency actions are passed to the scene in Europe. Standard & Poor, said Monday that a proposal by French banks to help the Greece to meet its medium-term funding needs would be a de facto default, since banks would be required to roll over loans for a longer term to a lower interest rate. That deflated hopes that the problems of the Greece could be under control soon.

"We continue to work for a possible solution", Michel Pébereau, Chairman of BNP Paribas, the biggest French Bank, said Tuesday to the Conference of Paris Europlace, a rally attended by hundreds of international bankers.

With the Greece effectively bankrupt, French and German banks want to give Athens more time to repay the loans as they come due. But they are having to return to the drawing board, after the Standard & Poor rating agency, said Monday that such a measure would be the equivalent of a defect because the banks should wait longer to be reimbursed and the value of Greek bonds would be reduced.

That deflated hopes that the problems of the Greece could be under control soon. If the proposals do not, work Mr. Pébereau said, "we will come with something else."

French and German bankers were scheduled to meet Wednesday morning at the headquarters of BNP Paribas in Paris with representatives of the Central Bank, under the auspices of the Institute of International Finance, an association of major financial companies of the world, to discuss the way forward, said the people informed of the plan were not allowed to speak publicly.

Banks are to discuss the consequences of the decision of the s. & P. which Greek proposal to refinance the debt, would be a "selective default", as well as what would be a true by default, the people said.

The difference is crucial, because default all the European Central Bank would not able to accept the Greek debt as collateral.

"Everyone here is anxious, said an Executive with the French unit of a major U.S. financial institution, which was not authorized to speak publicly." The world is interconnected. It is not only a problem for the Greece. All banks are nervous and strongly want a solution. »

Investors seek not only to what support financial Greece receives from its European partners and the Monetary Fund Greek International, but also to whether the Greece private creditors could declare losses on their holdings of debt, which would affect the balance sheets of banks. Banks are seeking to obtain clarity on how large any losses can be before they must report quarterly earnings once, near the end of September.

A rival of s. & P., Investors Service of Moody, said Tuesday that banks could have on their existing Greek bonds book losses if they choose to roll over maturing debt.

French bankers had not contacted the rating agencies to know their proposal to refinance the Greek debt to determine whether the agencies would consider such default action. "The French banks have jumped too soon," said a banker involved in the discussions.

Finance Ministers the euro reached an agreement last week to keep the Greek Government operating through the summer, but put off the coast of the question of how to provide a second rescue plan to meet its needs for funding through 2014.

There is broad agreement that a kind of debt relief is necessary, and responsible, especially in Germany and the Netherlands, want banks bear part of the pain of a debt restructuring. The negotiations are complicated by the fact that a declaration of default by rating agencies could cause a dangerous escalation of the crisis.

The German Chancellor, Angela Merkel, said Tuesday that the views of the I.M.F., the European Central Bank and the European Commission should be given more weight than those of the agencies rating, Associated Press reported from Berlin.

"I hope especially the case of these three institutions," said Ms Merkel.

A sign of how heavy the calculation rescue plans became, Superior Court of the Germany Tuesday heard a suit filed a year by six plaintiffs who argued that the Greece German aid was unlawful under European rule which prevents the u. the Member States to take on the obligations of the Governments.

The case was serious enough that Finance Minister Wolfgang Sch?uble has been arguing that the Government had no choice but to the return of aid for the Greece.

"A common currency cannot do without the solidarity of all members," The Associated Press cited Mr. Sch?uble said.

Moody cuts ratings credit adverse Portugal

Portuguese flags is seen on the meeting room in Lisbon on June 16, 2011.

Credit: Reuters/Jose Manuel Ribeiro

NEW YORK | Tue, July 5, 2011 2 pm EDT

NEW YORK (Reuters) - Moody Tuesday investors Service rating of credit of the Portugal crossed into junk territory, saying: there is great risk for the country will need to a second round of funding official before it can return to the capital markets.

The increased concerns that Portugal will not be able to fully achieve the reduction of the deficit and debt stabilization targets set out in the agreement of loan with the European Union and the Monetary Fund International weighed on the decision of Moody.

He is also a growing probability that Portugal will not be able to borrow at rates sustainable in capital markets in the second half of 2013 and some time later, Moody said.

Portugal is facing considerable challenges in reducing spending, increase compliance with tax, economic growth and support of the banking system, the Agency said.

The Coupe Moody rating credit of the Portugal by four levels of Ba2. This is the first of the three major agencies ratings to the credit of the Portugal in junk status. Standard & Poor and Fitch Ratings have Portugal to BBB-minus, at the bottom of the range of investment grade.

(Reporting by Walter Brandimarte and Daniel Bases;) (Editing by Leslie Adler)

Elusive reserves gold Europe: are the Greece, the Portugal, sitting on billions of Dollars? (Time.com)

By DANIEL ECKERT and HOLGER ZSCH?PITZ / DIE WELT / WORLDCRUNCH Daniel Eckert and Holger Zsch?pitz / Die Welt / Worldcrunch - 1 h 50 minutes ago

This position is in partnership with Worldcrunch, a new global news site translated stories of note in foreign languages in English. The following article was published in Die Welt.

The first thing that insolvent private person is forced to is waive the silver family. But other rules seem to apply to the Governments. If they have lived beyond their means for a few years or decades, some countries hold on tight to their credit, declare unable to repay their debts and to turn to other countries for help.

The European Union (EU) has seen many example. For now, the Greece is in negotiations with the troika EU-European Bank Central-International Monetary Fund for a new rescue plan - all Athens sits on an impressive four-million-ounce (125 U.S. tons) cache of gold, which could carry four large trucks, fully loaded.

Brilliant in the Greek National Bank coffers are EUR 4 billion. If Athens were selling only gold, the Greek State would be theoretically capable of at least part of the due debt payments soon without any outside assistance. (Read how the economic crisis of the Greece is threatening the Euro).

Another country in crisis, Portugal, also holds significant amounts of precious metals, dating back to the time of the regime of Ant?nio de Oliveira Salazar. Instead of using, Lisbon could converted value of the euro for its 13 billion dollars in liquid gold.

Nick Moore, chief strategist of commodities to the Royal Bank of Scotland (RBS) in London, reported that a question often asked by clients of the Bank is why these Governments do not sell some of their gold. After all, it is recognized worldwide as an asset that can be sold even in difficult economic times. Gold in the central banks of the members of the euro area is some 375 billion euros.

With that, 4.5% euro EUR 8.3 billion public debt could be paid in one fell swoop. Its debt, the Portugal is particularly rich in gold. Lisbon could bring 383 tonnes on the market and at the current rate, to EUR 13.3 billion.

The problem is particularly unstable because the Portuguese pressed just a program of 80 billion euros from the European Union. The reason given for the application of the aid was that the country would not be fair conditions of capital markets, but he needed money to repay outstanding loans. With the money they have are derived from the sale of gold, they would have been able to repay a large part of an older debt that they have been carrying which is due this year.

In comparison with the rest of Europe, Lisbon is disproportionate accumulation of large amounts of gold. No other country has as much precious metal in their foreign currency reserves. In the Euro for the first years, the National Bank is shy on the sale, the reducing its gold reserves of 20 to 12 million ounces and raising liquidity of approximately 2.8 billion euros. (Photos: see the events in Athens.)

But Portugal stopped selling in 2007 and it was the Greece. At the beginning of the new millennium, Greeks sold large quantities of metal, but when the crisis strikes, they left intact supplies and the Europeans for help.

This cannot, however, be entirely due to the lack of will on the Government to use their gold reserves to repay the debt. There are institutional barriers: Ministers of finance have no direct access to gold reserves. Central banks are independent institutions not subject to the orders of the Government - a requirement of contracts monetary union European. Yet, these same contracts contain other passages that Europeans were not met, as the Article 125, known as the "no clause bailout." "

Article 123 prohibited funding for the budgets of the State through the European Central Bank, but de facto happened when the ECB buy Greek bonds in May 2010. Then there is Article 126, which governs the policy to deal with excessive deficits in the Member States. These procedures were invoked pro forma but never actively implemented. Before the financial crisis, 13 cases have been opened and closed.

There is an excellent opportunity to put the gold on the market today. The price of the precious metal is just below Records. It is also quite latitude with respect to the Washington Central Bank Gold Agreement (CBGA), a number of central banks is signatory, agreeing not to bring more than a specific amount of metal on the market each year.

To 400 tonnes allowed, only 53 tonnes were sold during this accounting period, whose 52 tons of reserves of the Monetary Fund International. If central banks want to sell under the agreement, they are free to do so until 26 September, when sales quotas expire. Several central banks around the world are doing just the opposite and yet continues to be stored.

To Worldcrunch:

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Portugal shows zeal of austerity, refer to high-speed rail (AFP)

Lisbon (AFP) - the new centre-right of the Portugal Government promised Tuesday to go beyond the objectives of austerity agreed in its EU - IMF rescue plan, sacrificing the completion of a high speed train linking with the Spain.

Suspend the construction of the rail link Lisbon-Madrid high speed that was scheduled to be completed by 2013, as part of a four year program Government submitted to Parliament for approval.

The Portuguese Prime Minister Pedro Passos Coelho promised Government of "scrupulously apply the measures negotiated with the Monetary Fund International and the European Union," but said he wants to be "more ambitious in the process of adjustment to the Portuguese economy.

This was to "guard against external and internal potential," said a Government document detailing the plan.

Bailout Lisbon, Portugal ($112 billion) of EUR 78 billion to implement stringent financial control measures, to introduce reforms and sell property of the State to improve the weak structure of the economy.

The country must press its public deficit of 9.1% of the domestic product gross year last three percent in 2013.

There were growing concerns that a Greek default could spread a new wave of contagion throughout the euro area, further damage weaker economies such as the Portugal.

"Complementary measures of a structural nature" will be adopted if necessary "to ensure respect and achievement targets early which is linked to the country and restore international confidence in its economy, also" promised in the Government.

The Government program, due to be debated by legislators, on Thursday and Friday, announced it would "suspend" construction of the high-speed rail project.

This could be revisited at a later stage, for a possible renegotiation of the contract, the document said.

The contract for the first section of the line of Madrid was signed in May 2010, while the process of tendering for a second section was never completed.

The project was to reduce the travel time between the two capitals within three hours and bind the Portugal to the railway network at high speed in Europe, at a cost of EUR 3.3 billion to Lisbon.

The Minister of transport of the Spain, Madrid, Jose Blanco, said that if the suspension is approved, it would be "a bad decision" while adding that he also wanted clarification if it would be a temporary or permanent stay in the project.

The rail link was a flagship project of former Socialist Prime Minister José Socrates, but the centre-right long called for him to be delayed to reduce the debt of the country, reaching 93% of GDP in the last year.

The new Government also pledged to reconsider the construction of a new airport for Lisbon, which was to be completed by 2017.

It is committed to expanding the privatization of media held the State to include the sale of a string of television, radio and press agency Lusa.

The Government also promised reforms of the labour market to eliminate all fixed-term employment contracts by simplifying the regulations for employers to put an end to new recruits.

It is committed to implement existing laws and to create an independent authority to monitor expenditures.

Portugal is in high demand, reduce the cost of sale of debt (AP)

Lisbon, Portugal - Portugal highlighted raised debt euro750 million ($1 billion) in a sale of bonds, on Wednesday, with a lower rate of interest and demand reflecting an easing of tension on the financial difficulties of the country.

Results boosted confidence in markets, although many analysts expect Portugal to finally get a rescue plan as the Greece and the Ireland, despite the insistence of the Government, that he did not need help.

Debt agency said that the yield on the invoices of 12 months is 4.03 percent, down sharply from 5.28% on the same bill last month. The application was three times the amount of the offer.

The country has experienced no difficulty in raising funds for the moment, despite the concern of its debt burden and lean growth. Portugal must raise euro20 billion financial markets this year.

The fall in the cost of the financing of the Portugal is another good news for the minority Government, which is scrambling to finance the country on an even keel in the middle of nervousness on the financial strength of the largest euro area.

Secretary of State for cash, Carlos Costa Pina, stated that the sale has shown that the Portugal efforts bear fruit.

"This is an encouraging signal for us because it reflects the efforts of the Government towards budgetary consolidation are recognized," he told journalists.

European leaders are willing to avoid contagion of the market, particularly in much larger of Spain, which would be much more expensive to save.

Nations euro 17 meeting in Brussels earlier this week, the Ministers discussed stimulate the size and region bailout Fund powers as block attempts to reach a solution more complete in the debt crisis. Final decisions are expected in the coming months.

Portugal last week raised euro1.25 billion in bonds maturing in 2014 to 2020. Performance of binding of 2020 a dove 6.716% 6.806% the last time that the Government has tapped investors in November, raising hopes, is to restore the confidence of investors with its program of austerity of pay cuts and tax hikes.

Yet, the result of the sale of bill on Wednesday highlighted how the financial difficulties of the Portugal expanded last year — 12 months ago, the rate of interest on its invoices of 12 months was 0.93%.

"This is no a source of great celebration, but the fact that the State has been able to place the amount he wanted and that it is still the market demand provides a space for breath before the next phase of crisis, Filipe Silva, a manager of Banco Carregosa, debt has.".

Moody's Investor Services has warned that it may cut its A1 rating on the Portugal, while ratings Services Standard & Poor is also considering a downgrade.

Investors are worried about prospects for growth, Portugal with most forecasts predict that the economy slide into a recession this year.

European stocks higher after the sale of bond of Portugal (AFP)

London (AFP) - European stock markets were higher Wednesday as zone euro debt worries were soothed by auction link successful record economic growth for the Germany and the Portugal, said analysts.

Index FTSE 100 in London main actions increased by 0.33% to 6,034.04 points in midday trading.

DAX 30 Frankfurt rallied 1.23% at 7,027.02 points and Paris CAC 40 has acquired from 1.25% to 3,910.09.

The Lisbon market was 0.86% while Madrid has climbed to more than 3.46%, driven by an increase in the banks of the shares.

Portugal paid lowest on long-term debt rates of 1.25 billion euros ($1.62 billion) Wednesday it raised in a test critical for its credibility and the wider area in euro capital markets.

The DMU Portuguese, said the performance or the rate of return for investors in bonds coming due June 2020 descended to 6.716%, passing from 6.806% during a similar sale in November.

However, bonds coming due October 2014 offering also, performance is passed to 5.396%, until suddenly 4.041 p paid November — suggesting that short-term Outlook was more guarded.

"The Portuguese auction was well received," RIA Capital Markets analyst Nick Stamenkovi? told AFP.

"Not only did Portuguese treasure to draw the maximum provided, but performance was below November." This should encourage a gathering of relief for the Portuguese sovereign bonds. »

EU diplomats say that Portugal comes under strong pressure from several European countries to accept external aid in the middle of the concern that a debt crisis fresh euro area may spread in Spain, a much larger economy.

For its part, Spain also provides its first issues long term of the year on Thursday, to sensitize the two to three billion euros over 5 years bonds.

The great fear is that, if the bond rates go too high, the Spain may be forced to seek an international rescue - a crisis with global implications that would dwarf the bail out the Irish and Greek and possible similar to the Portugal action.

Debt auction Wednesday marked first foray of the Portugal in bond, since the Ireland was forced to seek a November EU - IMF rescue plan.

Prior to the auction on Wednesday, the dataset for the great economy of Europe in Germany showed German growth hit a record 3.6% last year.

Germany incurred by 4.7% in 2009 in its worst post-war recession of bounce to show the strongest growth since its reunification in October 1990.

We've grown twice the average of the European Union"in 2010, said Rainer Bruederle economy Minister.

Asian markets stock edged upward Wednesday, taking a cautious approach to the debt crisis in Europe, but with the rise in the prices of products supporting resource stocks.

Actions were usually stimulated by gains on Wall Street and the Japan announced that it will buy bonds of a eurozone Rescue Fund to help fund the bailout of the Ireland and support the block of debt-hit, said analysts.

U.S. stocks posted gains moderate Tuesday, supported by a positive start to the season of quarterly earnings.

Portugal, refusing rescue plan faces binding key test (AP)

Lisbon, Portugal - Portugal is inflexible, there no need international rescue plan to fix its problems of debt, but he now faces an auction of bond on Wednesday that could reveal the price to go to the same impetus to financial crisis in Europe.

Portugal is one of the smaller members and frailest 17-nation euro zone after the Greece and Ireland, which last year had massive subsidies to their partners of the European Union and the Monetary Fund International.

Investors have identified the countries debt as the next potential crisis victim and pushed its borrowing costs at sustainable levels barely requiring premiums higher for the loan of money.

Market tensions have eased slightly after Japan said he would help to finance a portion of Europe, rescue efforts that echo its commitment by China, but the situation remains dire.

Portuguese Prime Minister José Socrates sought to calm the nerves frayed Tuesday with his Government, which has introduced a package of austerity of pay cuts and tax hikes, made progress in reducing its budgetary deficit. Preliminary data indicate that deficit than last year would be less than the objective of the Government of 7.3%.

"The Government is doing its job and do", Socrates said at a press conference. "I wish to emphasize once again that...". Portugal seeks no financial assistance for the simple reason that there no need for it. »

But reports say the Germany and France, two major financial Europe grow in Lisbon to accept assistance to verify the debt crisis spreading to improperly further major countries that would be much more expensive to save. Portugal, such as the Greece and the Ireland represents only about 2% of GDP in the euro area.

Analysts estimate Portugal would require a rescue plan for euro50 billion to euro100 billion ($ 65 $ 130 billion). A rescue for the Spain operation is several times larger.

Finance Minister Fernando Teixeira dos Santos vented frustration with a lack of help from other European nations to keep the Portugal to take financial assistance. Repositioned come with strings attached - more painful austerity - which erode sovereign capacity countries to control its budget policy.

"We are doing our job." Obviously, Europe does not work to defend the stability of the euro, "he told radio TSF." It was not specified.

In the euro area, the European Central Bank has endorsed the main task of the stabilization of markets by quietly buying bonds more indebted countries of Europe, such as Portugal, Ireland and Greece, on the capital markets. Bond purchase supports their prices and reduces the performance of obligations.

But more help is from outside the region.

Japan is committed to fund approximately one fifth of the next European Rescue Fund bond issue which is estimated to about 5 billion ($6.5 billion).

China had promised earlier help Portugal, like the Greece and the Spain, he supported by buying their debt. While details have not been released, reports suggest China is ready to invest at least euro4 billion.

Analysts say that Asian countries are probably interested in yields higher in Europe as well as stabilization of global markets between partners commercial key. China, which has long vilified by the United States and Europe to keep its low currency to boost exports, can be the search for political goodwill.

The extent of the problems of the Portugal market will become more clear on Wednesday, when the Government auctioning off the coast of bonds of 3 and 9 years. Request of poor or high painful at the auction interest rates would further strain on the financial difficulties of the continent.

Analysts believe Portugal raise money, but at a heavy price.

"They can exploit the market... but in terms of a more average perspective and in light of what it means for the country's debt Outlook and that a greater amount of money is required to service this debt... This isn't a real reason for comfort," said Michael Leister, an analyst with fixed income to WestLB commercial bank in Düsseldorf, Germany. ""

The Portuguese bond yields of 10 years, a telling test of the investor sentiment has recently reached a record of over 7% euro-ère compared to about 3% for the eurozone powerhouse Germany. This level of interest on loans is not far rates that finally forced the Greece and Ireland to concede defeat after months of rejecting a rescue.

New data deficit and the promise of the Japan in support of European debt Portugal 10 year bond yield has contributed assisted refuse 6.87%.

Among other heavily indebted countries, Italy also saw his ascent of yields, but has no problem of selling euro7 billion in obligations of 12 months offered Tuesday.

More worrying are the Belgium, the level of debt of 98.6% of GDP in 2010 would be the third most high EU behind the Spain and the Italy and the Greece, which is nearly two years of recession. Madrid is organizing an auction of bond Thursday.

The Greece raised euro1.95 billion in the auction of Treasury bonds Tuesday, easing concerns a day after his success in bond yields a record.

Socrates, Portuguese Prime Minister, said his deficit cuts are among the sharpest in the eurozone 17-nation and that the Government could bring down the deficit to 4.6% this year. 9.3% Portugal 2009 deficit was the fourth most high in the euro area.

However, much of the reduction of the deficit last year was attributable to tax increases and one-off factors while expenditure continued to grow, albeit at a slower pace.

Prospects are not brilliant. In a report, the Portugal Bank said Tuesday that he expected the economy sank into recession, the next year by austerity measures. Its forecast of a 1.3% contraction are roughly analysts expectations.

___

Pan Pylas London, Menelaos Hadjicostis in Cyprus and Derek Gatopoulos Athens has contributed to this story.

ECB gives lifeline Portugal, temporary retailers say (Reuters)

London/Brussels (Reuters) - the European Central Bank donned Portugal buoy temporary rescue Monday by buying its bonds, said traders, the pressure of the market and peer mounted to Lisbon to seek an international rescue plan soon.

A source of senior eurozone told Reuters Sunday as the Germany, France and other countries of the euro area grew Portugal to seek an EU - IMF assistance program after the Greece and Ireland, to prevent the contagion spread to the much more Spain, the fourth largest economy in the euro area.

Premium Portuguese sovereign debt interest rates fell Monday after sharply increasing as traders said last weekend that the ECB has intervened to buy bonds of the Government in the secondary market.

"They buy 5 years and 10 years at the Portugal, what people are offering really," said a trader.

Another trader said the ECB to buy bonds of Greek and Irish too. EU sources assert that Central Bank has not yet purchased the Spanish government debt.

The source of the euro area said that Lisbon between 50 billion and EUR 100 billion ($ 64.5-$ 129.1 billion) in the form of loans, similar to the Ireland, who has accepted a rescue of EU - IMF EUR 80 billion in December after a banking crisis caused by a housing bubble burst entangled state with the huge passive.

"LITTLE CHANCE OF ESCAPE.

German Finance Minister Wolfgang Sch?uble, denied that Berlin was pushing anyone to ask for help, but he said he was defending the euro.

Spanish economy Minister Elena Salgado said that Portugal did not need to ask for help because he was meeting its commitments to reduce its budget deficit. And the European Commission stated that no discussion is currently underway on assistance to the Portugal or any other country.

But economists and analysts said market it is generally regarded as only a matter of time before high-deficit Portugal, with a stagnant economy lost competitiveness since its entry into the euro area, should seek assistance.

"If the market extends Dungeon amounting, Portugal has little chance to escape from a rescue, said Laurence Boone, Director of research at Barclays Capital in Paris.

Deutsche Bank economists Gilles Moec and Marco Stringa stated in note that the Government of Lisbon should significantly "over-issue" debt in the first four months to avoid deterioration marked its cash position while the Portuguese banks will face a peak in their need to refinance in January and February.

"It would be rational for the Portugal to seek outside help sooner rather than later, they said.

European Finance Ministers are due to consider a more comprehensive response to the crisis of continuous debt during their next monthly meeting 17-18 January.

A spokesman for the German Finance said Portugal was not in the agenda, but the source of the eurozone said informal exploratory talks have already begun.

Senior eurozone source said that the comprehensive approach would entail:

-implementation of austerity measures to reduce public deficits, which was already on the right track;

-supplementing the European financial system repair tougher Bank stress tests due to the first quarter;

-strengthening financial net of security in the euro area, which is subject to intensive negotiations with the Germany;

-complete the reform of the economic governance of the euro area by pushing the legislation required by the Finance Ministers of the EU Council and European Parliament; and

-implementation of structural economic reforms of labour markets and pension systems, on which the European Commission should make specific recommendations, this week.

ELEMENT TOUGHEST

The most difficult element to this agenda is the strengthening of financial performer by German resistance to the increase in the size of the European financial stability facility 440 billion euros, EU sources say.

Berlin has also opposed to him to be used with more flexibility to provide standby credit lines or to buy State bonds or to finance the recapitalisation of the Bank before a country hits the buffers.

Friday last, Portuguese Prime Minister José Socrates said that his country did not need outside help because he was ahead of schedule reduce its budget deficit.

Socrates, who leads a minority Socialist Government, is stubbornly avoiding rescue, aware of traumatic history of International Monetary Fund rescues two of the Portugal since its return to democracy in 1974.

The memory of the participation of the IMF in 1977 and 1983, is so etched on the Portuguese psyche as the media of the country are not even mention would mainly the EU who would fund any bailout of that time.

Many Portuguese, remember the loss of sovereignty and the difficulties the country traversed during these periods.

(Additional reporting by Axel Bugge at Lisbon, Tracy Rucinski Madrid, Annike Breidthardt Berlin, written by Paul Taylor; editing by Mike Peacock)

Issue of debt from the Portugal to weigh on Wall St to open (Reuters)

NEW YORK (Reuters) - U.S. stock index future emphasized an open lower Monday as renewed concerns about the eurozone eclipsed lift of several large acquisitions sovereign debt crisis.

Pressure grew on the Portugal to seek financial assistance from the European Union and Monetary Fund International, although the European Commission Monday denied that discussions are ongoing on a plan to rescue EU and IMF.

Duke Energy Corp. (DUK.)(N) has agreed to buy the progress Energy Inc. (PGN).(N) $ 13.7 billion in stock and DuPont (DD)(N) plans to buy Danisco (CDA.)(CO), a Danish food ingredient firm $ 5.8 billion.

Shares of dragged progress 1.5% to $44.05 in Premarket and Duke trade fell 1.6% to $17.50. DuPont, Dow component fell 1.5% to $49.02.

"Although it is always encouraging to get offers from this size, since it suggests confidence returns, we don't always know how much inconvenience we could see the situation of Europe," said Michael O'Rourke, Chief market strategist BTIG LLC in New York. "."

A group of private funds, including overall management of Apollo (APOLO.)(UL), interested in the purchase of Sara Lee Corp (SLE).(N) and contacted the company, a source said. Sara Lee has increased 5.6% to $18.40 before the Bell.

S & P 500 futures fell from 5.2 points to 1,262.50 and below fair value, a formula that evaluates prices taking into account interest rates, dividends and the time of expiry of the contract. Dow Jones industrial average future dragged 41 points and Nasdaq 100 future lost 6.5 points.

The S & P 500 is to find support for its moving average of 14 days, which is approximately 1,260. Last week the Dow and S & P encoches a sixth week advances, while Nasdaq rose by 1.9%.

Alcoa Inc. (AA).(N) is scheduled to report its quarterly results after the market closes, informally start fourth-quarter earnings season. Stock, a component of Dow, lined with 1.1% higher than $16.60 Premarket trade.

Rough future February increased 0.6% to $88.58 per barrel after the Trans Alaska Pipeline was closed because of a leak, raising concerns about how U.S. supply could be affected.

U.S. stocks fell on Friday after a decision of the Court in a case of seizures leading investors withdraw from bank stocks, weak after a dull jobs report added.

Portugal, said not under pressure to take bailout (Reuters)

Lisbon (Reuters) - Portugal denied Sunday that he is under pressure by the France and the Germany to find a rescue of Brussels and the IMF to mitigate concerns its debts, such as the Greece and the Ireland before it.

Saturday, the German magazine Der Spiegel said that the Germany and the France want to Lisbon to accept a plan of international rescue as soon as possible in order to prevent the spread of the eurozone debt crisis.

But a spokesman for the Portuguese Government has denied any these pressures by saying that the country is concentrated on the stimulate economic growth.

"Story (Der Spiegel) has no foundations, it is wrong," said the spokesman.

With Germany, a spokesman for the Ministry of Finance stated: "Germany is not push someone to accept a bailout."

Investors are increasingly concerned that Portugal will be unable to fund itself in the markets of debt, forcing them to obtain funding from abroad instead of this.

Last week, Reuters poll showed most economists expect Portugal need for a rescue plan.

(Reporting by Axel Bugge, Brian Rohan;) (Editing by Greg Mahlich)

Portugal pressure two seek EU and IMF aid: source (Reuters)

Brussels (Reuters) - pressure grows on the Portugal of Germany, France and other countries of the eurozone to request financial assistance from the EU and the IMF to stop block debt crisis from spreading, a source of higher euro area said Sunday.

Preliminary discussions on the possibility to ask for help if its cost of the financing markets become too high for Portugal were held since July, said the source.

No. formal talks on aid began again, a number of sources of eurozone said, but pressure was rising in the Eurogroup, which brings the eurozone finance ministers.

"France and the Germany indicated in the context of the Eurogroup Portugal should apply to aid sooner rather than later," the main source said, adding that the Finland and the Netherlands have expressed similar views.

Earlier Sunday, a spokesman for the Portuguese Government refused to report German magazine that Lisbon was under pressure from Berlin and Paris to seek an EU rescue plan and the Monetary Fund International.

Many policymakers hope EU and IMF funding for the Portugal would ring fence the debt crisis in euro area, including the Greece and the Ireland were already taken orchestrated.

Assist in Lisbon would protect the Spain which could be the next in line, but whose funding must extend the capabilities of current aid euro zone at the edge.

"The real battle will be the battle of Spain - but, I think we have much more chance of success," said the source.

Asked to estimate the possible size of a program that Portugal would need, said the source:

"More than 50 billion euros and less than 100 billion euros, say between 60 and 80 billion, but it is off the coast of headlines, because we do not know the needs of the Portuguese banking sector."

Portugal is considered by many economists as the device of the euro area are more likely to follow the Ireland and the Greece as it seizes to cut its debt and borrowing costs.

"Portugal do the has not asked - you cannot force someone to wants something," a second main source of eurozone said. "Arithmetically strictly speaking, it is not necessary, but because the nerves of some market players, it may be useful."

Pressure on Lisbon to ask for help has increased since Portuguese paper yields rose last week to levels that many regard as non-viable, the first source said.

Already there was pressure on Lisbon to request financial assistance before a mid-December EU leaders Summit, but without effect, the first source said, because the Portuguese Prime Minister Jose Socrates opposes such an approach.

"He y still memories at the IMF program Portugal 1970s and the loss of sovereignty that it entails," said the source.

When the Portugal may be forced to turn to the European Union and the IMF to help, the first source replied that this depended on developments in performance of the position of Socrates and how much pressure the German Chancellor Angela Merkel and French President Nicolas Sarkozy were willing to apply.

Portugal takes his first auction of bond of the year, next week, offering $ 1.25 billion of euros of paper maturing in October 2014 and June 2020.

"This auction will be closely monitored," said the source. The Portuguese bond yields of five years on the secondary market is 6.43 crafts paper percentage and 10 years at 7.26%.

Document in five years is already higher than the cost of financing that Portugal would get in the EU and IMF assistance, said the source.

"They had a difficult week markets", a third source of eurozone said, referring to the thrust of the yields on good Portuguese primary auctions last week and the evolution of the secondary market.

"The question is whether they can raise what they need in the first half of the year with the longest delivery end of the curve." «View the calendar occupied in the first quarter, it's a challenge", said the third source.

The first source also noted that Lisbon was already a step ahead with the reforms that are part of a potential assistance program, the Portuguese Government should apply for it.

Recent reforms of austerity of the Portugal, part of the 2011 tough budget have been worked on in cooperation with the European Commission "as a program of aid, but without funding", said the source.

(Statement by Jan Strupczewski, editing by David Stamp)

France and the Germany want Portugal to accept assistance: report (Reuters)

BERLIN (Reuters) - France and the Germany want Portugal to accept international as soon as possible rescue plan in order to prevent its debt crisis is spreading to other countries, the German magazine Der Spiegel reported Saturday.

Without cite its sources, magazine says expert Government of two tenors of the Europeans are concerned about Lisbon will soon be able to finance its debt at a reasonable rate, after its borrowing costs rose at the end of last year.

Berlin and Paris also want eurozone countries to commit publicly to do what it takes to protect the single currency of the block, including complete a Fund of 750 billion euros ($968 billion) rescue if necessary.

Portugal is considered by many economists as the device of the euro area are more likely to follow the Ireland and Greece to seek an international rescue plan as it seizes to cut its debt and borrowing costs. It held its first auction of bond of the year, next week.

(Written by Brian Rohan.) (Editing by Alison Birrane)