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Is Portugal the eurozone's weak link?

Friday, February 12, 2016 - 01:37

Investors are asking questions about Portugal, amid growing concerns about the health of European banks and the global growth outlook. As the country's bond yields rise, is it the weak link in the euro zone? Kirsty Basset reports.

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After a nerve-wracking week for global markets, European investors are turning their attention to the periphery, particularly Portugal. They're wondering whether the new anti-austerity government will be able to stick to its budget - and prevent the country from a credit rating downgrade. Eurozone finance chief Jeroen Dijsselbloem. (SOUNDBITE) (English) EUROGROUP PRESIDENT, JEROEN DIJSSELBLOEM, SAYING: "There has been a process between the Portuguese government and the Commission on the budget and the Commission has now come to an opinion which is that they accept this budget but do feel that there is a risk." Portuguese bond yields have surged as investors worry a rating downgrade could lead to the country being dropped from the ECB's QE programme. There's also broader concern about European banks and how they could be impacted by countries hurting from low oil prices. Charles Stanley's Jeremy Batstone-Carr. (SOUNDBITE)(English) CHARLES STANLEY'S CHIEF ECONOMIST, JEREMY BATSTONE-CARR SAYING: "People are putting two and two together and wondering whether peripheral European banks may very well have been involved in lending money to emerging economies and if do what their potential vulnerabilities will be." Another periphery country causing concern is Greece. And as bond yields rise, so too are tensions on the streets of Athens. Farmers are protesting tough pension and tax reforms, which are a prerequisite for the country accessing bailout funds. Further scaring away investors, new GDP data shows the country is once again in recession.

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Is Portugal the eurozone's weak link?

Friday, February 12, 2016 - 01:37