The Portuguese stock market plunged 5.71 percent in early trade yesterday, a day after its credit rating was slashed by two notches amid fears it could follow Greece into a debt crisis.
The benchmark PSI-20 index stood at 6,744.17 points shortly after trading began.
Ratings agency Standard & Poor’s on Tuesday cut Portugal’s long-term credit rating to A- from A+ and warned the outlook was negative in light of the country’s fiscal and economic structural weaknesses.
The downgrade helped drag down the Lisbon stock exchange by more than 5 percent on Tuesday, while the interest rate demanded by investors to hold Portuguese government debt — the bond yield — rose to more than 5.6 percent.
On Tuesday, the Portuguese government denounced an “attack from the markets” after its credit rating was downgraded and rejected any comparison to the debt crisis in Greece.
“It is a decisive moment. The country must respond to this attack from the markets,” Portuguese Finance Minister Fernando Teixeira dos Santos said.
“We must remain calm and bring serenity back to the markets ... As in the past, we will do what is necessary to reduce the deficit and promote the competitiveness of the Portuguese economy,” he said.
The minister rejected any link to Greece, which is trying to negotiate a joint EU-IMF bailout package in order to be able to meet its maturing debt obligations on May 19.
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