| At the Portuguese government the opposition parties have withdrawn their support for austerity policies that
may lead to the Lisbon government's collapse on Wednesday.
The government's expected defeat in a parliamentary vote is likely to trigger an international financial rescue.
The vote comes on the eve of a European Union summit where leaders who will include An Taoiseach Enda Kenny hope to finalise a eurozone debt crisis plan.
Last year Greece and the Republic of Ireland had to accept massive rescue packages after markets lost faith in their governments' efforts to deal with their debt burdens.
Portugal's financial collapse would likely spark another round of nervousness in financial markets and may spill over and increase the concerns about the larger Spanish economy.
Opposition parties say the austerity plan - cuts in welfare, tax rises, and increases in public transport costs - go too far.
Prime Minister Jose Socrates has said if the package is rejected he will not be able to run the country.
Major international lenders have been wary of Portugal's attempts to avoid tapping eurozone bail-out funds by raising money in the debt markets.
The yield on Portugal's 10-year bond was at 7.4% Tuesday, close to recent records, an indication of investors' concerns about the country's ability to pay back its debts.
On Thursday eurozone leaders begin a two-day summit at which they hope to finalise details of a "grand bargain" to deal with the 17-nation group's debt burden. |
