DUBLIN – Anxiety over heavy government debts in Europe flared up again Wednesday, as investors questioned whether countries like Ireland, Greece or Portugal can cut their budget deficits without choking off desperately needed economic growth.
Markets were increasingly betting that Ireland might be next in line for a massive financial bailout from its partners in the euro currency, after Greece's euro110 billion rescue from the brink of bankruptcy in May.
The interest rate, or yield, on Ireland's 10-year bonds jumped above 8 percent for the first time since the euro was introduced in 1999, reaching 8.64 percent in afternoon trading. Portugal managed to raise euro1.25 billion ($1.74 billion) in 6- and 10-year bonds, but at significantly higher interest costs than in September and August.
The fall in Irish bonds was accompanied by an announcement from London-based LCH.Clearnet Group, the world's second-largest bond clearing house, that it is significantly increasing the cash deposits it requires from traders dealing in those bonds. (more)
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