EU blamed by analyst for turmoil on markets
Portugal resists bailout pressure
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EUROPE faced more seemingly inevitable bailouts yesterday as it battled to keep the debt crisis from engulfing country after country.
As Ireland inched closer to a deal with the IMF and EU, Portugal and Spain insisted that they would not seek outside help -- creating an eerie sense of deja vu for investors.
The Portuguese parliament approved an unpopular austerity package -- but analysts believe the move has bought only a little time.
As speculation mounted that the EU-IMF bailout of Ireland would require investors to take losses -- a possibility that had earlier been denied by officials -- one analyst blamed disunity in the EU for spooking the markets.
"This 'pea soup' of indecision, vacillation and disunity by the EU is beginning to create unnecessarily seismic waves of fear in the markets," said David Buik, markets analyst at BGC Partners.
Portugal's high debt and low growth have alarmed investors, but its insistence that it does not require an international rescue is ominously reminiscent of previous claims by Greece and Ireland.
Analysts said markets needed more reassurance from EU leaders that the rot can be stopped before spreading to Spain. That scenario would threaten the euro itself.
It is increasingly apparent that investors want weak countries' public finances plugged once and for all.
Portugal's finance minister Fernando Teixeira dos Santos said: "There are those among our (EU) partners who think the best way to ensure the euro's stability is to push and force those countries which are most in the spotlight to accept assistance."
Markets have been jaded by policymakers' lack of coherence in their response to the debt crisis. So when Spanish Prime Minister Jose Luis Rodriguez Zapatero declared that there was "absolutely" no chance Spain would seek a bailout, the statement failed to instil confidence.
- BARRY HATTON
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