Portuguese socialists seeking to capitalise on the flailing incumbent government have called to renegotiate the country's austerity package. That's sent bonds spiking.
With German politicians unwilling to be seen to be bailing out European neighbours, and an election looming, the socialists are unlikely to get their way.
Ishaq Siddiqi, market strategist, ETX Capital:
Portugal’s 10-year bond yields jump to the 7.78% level, raising alarm bells across the market as investors fret about the deteriorating political situation in the country. Portuguese CDS blows out, wider by 64 basis points at 553bps and the PSI20 index slides. Despite reassurances by politicians, the market is fearing that more bailouts may be in order amid scepticism that Portugal will not be able to meet obligations of its bailout terms given the differing stances across the political landscape.