Portugal suffers from jitters on the back of Greek uncertainty

David Hellier
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YIELDS on 10-year Portuguese bonds rose to 5.3 per cent yesterday, as investors fretted over what the Greek debt crisis might mean for some of Europe’s more peripheral economies.

Now 10-year bond yields in Portugal have risen from 4.28 per cent a couple of weeks ago and yields on shorter term debt is rising too.

“We have argued for some time that the activation of the EMU/IMF package would add more uncertainties to already fragile markets. First, Greece asking for the package is a sign of failure as private funds failed to finance the ever bigger Greek deficit. The failure to fund Greece by non-official funds has put the focus on other peripheral countries such as Portugal,” wrote BNP Paribas currency analysts yesterday.

Meanwhile, Portugal witnessed some of the industrial unrest that has been common-place in Greece in recent weeks yesterday. A morning rush-hour strike by train drivers caused widespread disruption yesterday as workers protested against a government pay freeze at public companies. About one in four of the national rail company’s scheduled services ran during the five hours of the walkout.