Portugal

Cutting deficits is popular in the heavily indebted Western world. Some countries are being forced to, as lenders decline to lend them more money at realistic interest rates.

Polar Capital's financials manager John Yakas is shunning the troubled Southern European banking sector in favour of ‘more transparent' emerging European banks.

Portugal's finance minister said its €78bn EU rescue package will push the country into recession this year.

Portugal's caretaker prime minister Jose Socrates has announced he has reached agreement on a bail-out from the EU and the International Monetary Fund.

Jean Claude Trichet, the president of the European Central Bank, has defended yesterday's 25 basis point hike in interest rates as good for the eurozone, as EU leaders prepare for talks on the bailout of Portugal.

Portugal has become the third nation to ask the European Union for financial assistance.

Moody's has downgraded Portugal's credit rating for the second time in less than a month and has warned it could fall further.

Portugal has insisted it can cope with looming debt repayments, despite predictions from analysts it does not have enough money to meet its obligations.

Credit rating agency Standard & Poor's has downgraded Portugal for the second time, on the basis it may be unable to repay its debt, the Financial Times reports.

European leaders have agreed on a revised bailout package, creating a permanent fund to resolve the debt crisis in the eurozone.