Ireland's debt deal has failed to calm investors' nerves, as fears rise that Portugal and Spain could be the next eurozone nations in line for a handout.
As the two countries insisted they will not seek outside help, creating a sense of deja-vu for investors who have heard such promises from Ireland and Greece already this year, Europe braced itself for what some analysts said seemed the inevitability of more expensive bailouts.
Portugal's parliament approved an unpopular debt-reducing package, including tax hikes and cuts in pay and welfare benefits.
But the sense among analysts was that the move had only bought a little time.
"This confusing 'pea-soup' of indecision, vacillation and disunity by the EU is beginning to create unnecessarily seismic waves of fear in international bond and money markets," said David Buik, markets analyst at BGC Partners.
Analysts say markets need more reassurance from EU leaders that the rot can be stopped in Portugal, before it spreads to Spain, the continent's fourth-largest economy - a scenario that would threaten the 16-nation euro currency itself.
The financial crisis took a step in that direction last week, as it increasingly becomes apparent that bond investors will not be pacified by austerity measures but want weak countries' public finances to be plugged once and for all.
Meanwhile, tens of thousands of protesters took to the streets of Dublin yesterday to call for Ireland's 2011 budget cuts to hit the rich and the banks, not average citizens already struggling with reduced wages and rising bills.
The rally is the first major demonstration since Ireland last week opened negotiations with European Union and International Monetary Fund (IMF) experts on a likely $115 billion loan to save the country from bankruptcy and prop up its struggling banks.
2009 Al Sidra Media LLC
Provided by Syndigate.info an Albawaba.com company
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