Euro debt crisis rears ugly head

THE euro crisis moved dramatically back into the spotlight yesterday as a sharp spike in Portuguese bond yields at a €3bn (£2.5bn) debt sale forced the European Central Bank to plunge back into the market.

After two weeks of inaction, the ECB swooped in to buy what analysts said could be up to €2bn worth of bonds – two thirds of the day’s issuance – in a desperate attempts to keep a lid on Portugal’s borrowing costs.

In a case of what one analyst called “déjà vu”, the yield on Portuguese ten-year bonds shot up more than 20 basis points to an all-time Eurozone high of 7.6 per cent, but stayed there less than an hour before retreating down to 7.3 per cent.

The sharp spike in yields comes in the wake of a European Council summit last weekend that Eurozone leaders had said would result in a “comprehensive” package to solve the crisis, but which in the event produced very little.