Merkel says pleased by Portugal bond sale

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German Chancellor Angela Merkel said on Wednesday that she was pleased by the results of Portugal's closely watched bond auction, praising Lisbon for its "very impressive" austerity measures.

"From what I am hearing it went very well. I think that that is a decent piece of news," Merkel told reporters in Berlin after talks with Italian Prime Minister Silvio Berlusconi.

"All in all, Portugal has taken a range of extra measures. We are both of the opinion that these measures are very impressive."

She said: "Today the Portugal bond issue was over-subscribed and with an interest rate ... below the level that Portugal itself has said is problematic."

She added: "I see things optimistically, I think we can make it in Europe. We want to make it, and I don't know of a single colleague in Europe who says they don't want to make it.

"This is the spirit in which we should tackle things."

In a bond auction watched nervously around Europe, Portugal paid lower rates on its long-term debt, temporarily relieving the pressure on the embattled economy.

Observers have cited Portugal as the next possible candidate for a bailout after Ireland and Greece were forced to go cap in hand to their European neighbours amid a crippling debt crisis.

Lisbon is raising taxes and cutting wages as it tries to convince investors it can narrow its budget gap from 7.3 percent of gross domestic product in 2010 to 4.6 percent this year, still above the EU limit of 3.0 percent.

© 2011 AFP

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