With Portugal plea hopes Europe crisis included

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LONDON - Portugal's request for a bailout could mark at the moment that finally his debt crisis include Europe.

In contrast to previous bailout requirements, Portugal by a chorus of concern on the financial markets be next which country were welcomed. The European Central Bank raised even interest rates on Thursday, when it turned its sights reserves the dangers of the debt crisis for the problem of inflation.

This suggests that after a year of the Summit, faith can political spats and last-minute emergency measures, markets of the bailout of domino effect of be - although analysts warn the crisis has seen false dawns before.

Some had considered already Portugal issues the markets as its borrowing costs more unsustainable, was so the time was the only surprise in the bailout request.

The announcement by Portugal's caretaker Prime Minister Jose Socrates on Wednesday evening limited a torrid few months for the country that had used every tool available to prevent an embarrassing bailout.

The fire-fighting efforts were in vain. A combination of weak growth and high level of debt, there was no alternative to the cave and tap Europe's Rescue Fund.

But while the rescue plans for Greece and Ireland immediately by increasing market pressure on the next point of weakness in the euro zone had been followed, this time not been investors targeted another country, in particular Spain.

"There is little to suggest before that the Portuguese bailout, which become infected since upcoming some time Spain, is", said Sony Kapoor, Managing Director of the international economic think tank new. "Spain is by far a stronger and more dynamic economy."

The euro remained strong, close to 15 months, highs against the dollar at $1.43, mainly thanks to the expectations that the European Central Bank rate increase with further hikes will follow until Thursday in this year.

The answer in bond and stock markets has eased as well been with Spanish borrowing rates in the bond markets largely unchanged and the stock market one of the strongest performers in Europe.

Since the Government debt crisis exploded over a year ago, Spain was bracketed in vulnerable with Greece, Ireland and Portugal as a euro-zone economy.

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Fears that the debt crisis will inevitably request a bailout end with Spain would raised all sorts of questions about the future of Europe, not least if the euro currency itself could survive such a larger, more expensive rescue mission. These fears pushed the 17 euro countries in action, and they have largely beaten up the details of a bailout of permanent fund.

Spain has moved to protect themselves from speculative attacks in the bond markets at the national level. It has made concerted efforts - yet always inadequate, according - to some analysts, to implement its fragile banking sector, in particular the savings banks, restructuring and tough austerity measures. And it is the cause of public-sector wages and retirement age of 65 control 67 lifted.

If anything, these efforts have bought the country time to convince other markets that it is on the right track to the healing of their public finances. Although its entire debt to about 65 percent of Portugal's national income is less than 90 percent of Spain's annual borrowing is higher and investors want to see proof, which is the budget deficit down. For 2011, the Spanish Government has forecast that it will reduce its budget deficit to 6 percent of GDP by 2010 to 9.2 percent.

"Given the crisis such as in the course of the last years has been, we are fighting to see that the activation of help for Portugal will mark the end of the infection,", said Nick Matthews, senior European Economist at Royal Bank of Scotland. "We are therefore of the view that market confidence will remain countries with high private and public debt at the mercy of another loss."

Although the crisis for now been incorporated, is the euro still suffering the consequences of the debt market turmoil.

Greece, Ireland and Portugal face back years of hardship, to get their public finances in shape and many think they have no choice but to restructure their debts at a given time. This means that they must get governments creditors - especially the big banks in Germany and France - take losses.

The focus will likely Center on the size of the Portuguese financial package and what to do is have the funds land, in return for the resources in the coming days. Minister of finance are euro-zone on Friday in Budapest, Hungary, meet and Portugal's plight illustrates the main topic of discussion.

Discussions on the package - which are most estimates in the markets, that around 80 billion euros ($114 billion) need Portugal - is likely by the fact that Portugal not complicated a Government. Socrates came last month after a parliamentary defeat on additional cost-cutting measures and now serves as caretaker leader.

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Associated press writers Barry Hatton Lisbon, Portugal, and Daniel Woolls in Madrid contributed to this report.

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