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)

Tax gives pass Senate (Wall Street Journal)

Democrats predict that an agreement very - tax discussed will remove an important obstacle comfortably in the Senate Monday, with a margin that they hope will add momentum to the agreement in the House.

But even with President Barack Obama, former President Bill Clinton and a growing number of Democrats in the Senate, the safeguarding of the agreement, House Democrats remained willing to test whether they could push Republicans raise proposed on estate tax rates.

Associated press White House senior adviser David Axelrod talked about tax cuts in the face of CBS nation Washington Sunday.

It is not clear how much House Democrats would grow as combat. If a Bill is not passed to the end of the year, tax rates are planned for back, while the White House could block an immediate increase of restraint levels, pending the adoption of a tax bill by a new Congress next year.

Republic Democratic van de Chris Hollen of Maryland, a top adviser of the President of the House Nancy Pelosi predicts Sunday that any tax agreement would go home before the end of the session.

The room is "very focused on obtaining an overall tax compromise adopted by the end of the year", Mr. Van Hollen said in an interview. Republicans do alter the provision from the estate tax, he said, "if we have to go away."

In a separate interview on Fox News Sunday, Mr. Van Hollen said: "we are not going to keep this thing at the end of the day, but we do not believe this simple issue should be put to the test." "We're going to ask the Republicans and the other, they will block this entire agreement" on the level of taxes on estates?

Three aid Senate said that the tax package seemed likely to attract at least 65-70 supporters Monday in a voting procedure in the Senate to verify if it is supported to block potential Flibustier. Sixty votes is required for the Bill to cross this barrier. A vote on final passage is provided for one or two days later.

Chamber said aid strategy for Democrats in this room would be affected by the margin of the Senate vote.

"If you have 70 people a bipartisan vote, I see a situation where we really play this game of chicken and change [the Act]," said a Democrat than aid to House supporting legislation. "

The agreement negotiated by the White House Republican legislators would extend for two years, tax on the income sections enacted by former President George w. Bush. The agreement would also give a one-year reduction of most workers in social security contributions and adopt a series of jumps targeted for businesses and individuals.

Under the agreement, property tax was eliminated by 2010, would be reinstated next year at a high rate of 35% and applied to the estates over 5 million. Without action, the rate is expected in spring at 55% next year and applied to the estates over $ 1 million.

Many House Democrats argue that the agreement is too generous to inheritance. Some are advocating for change Bill to include a high rate of 45%, applied to the estates of $ 3.5 million or more. Another possibility, during the discussion is presenting and passing in a separate project of 45% Estate Tax Act, and then take the measure of the Senate, with the rate of 35%, depending on home assistance. Might give some unfortunate Democrats a chance to register their disapproval without blocking action.

For their part, the Republican Congress has promised to adhere to the terms of the agreement struck with Mr. Obama.

Rep Paul Ryan (r., Wisconsin), the Chairman of the budget Committee suggested that the Democrats House would damage the economy in the struggle for a superior estate tax.

"They are willing to sabotage the entire agreement - an agreement which enjoys bipartisan support in the Senate, an agreement with the President of the United States to get this economy" moving and prevent the hit our economy, which would be very destabilizing increases taxes "said Mr. Ryan." "" The answer is: no, we are not interested in the modification of this agreement. We are interested in passing through.

At the same time, Mr. Ryan expressed cautious optimism that leaders democratic House discuss to hold a vote after week called party members last to block the Bill, unless changes are made.

Even though the House Democratic leaders decide to push higher inheritance tax, there is no guarantee that they would be able to overcome the combined efforts of the White House and Republicans in Congress. Almost all 179, House Republicans are likely to support under the current agreement. This means that the White House needs only about 40 Democrats to gather a majority of 218.

White House seeks to build support among 52 House Democrats defeated in November, many of which are considered of centrists open to compromise on taxes.

A Democrat moderate defeated defending the provision of real estate tax in the current agreement.

"It is well designed and it has enough support to pass in the Senate and we must work hard to get here," said Rep Rick Boucher of Virginia. Still, he added, "it will take persuasive members working to support it."

Mr. Obama itself continued to individual legislators lobbying for the weekend, said aid. Friday, Mr. Obama also brought former President Clinton to the briefing room to make a field for the transaction.

Sunday, several White House counsel appeared on Sunday talk shows to promote understanding.

"It is extremely important for the economy and people across the country we let than this get a deadlock of Washington-style," said administration adviser David Axelrod on ABC "this week".

Some democratic support mean that a strong Senate vote could highlight Democrats room how to limit their options are. Even though the House Democrats reject the agreement earlier this month, the existing agreement likely will be pass the new GOP - run House in January and win the approval of the year next to the Senate where Republicans will also gain seats.

Some Republicans have suggested that the agreement could worsen still for Democrats in January if, for example, sought Republican spending cuts to offset the costs of certain provisions of the agreement, as an extension of long-term unemployed unemployment benefits.

Write toJohn d. McKinnon at john.mckinnon@wsj.com