Portuguese opposition parties have refused to back austerity measures drafted to help the country avoid a bail-out, in a rebuff that could trigger both a snap election and an international financial rescue.
The political crisis in Lisbon threatens to dominate a European Union summit on Thursday, at which leaders hope to finalise a “grand bargain” to resolve the eurozone debt crisis.
Portugal’s cost of borrowing hit new euro-era highs on Tuesday, with the yield on five-year government bonds rising above 8 per cent for the first time.
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