Investors once again ignored the efforts of the EU rebuild market confidence, the euro zone into the abyss of debt crisis: Italy and Spain, the 10-year German government bond yields and spreads over the same period on Tuesday, the euro zone hit a record high since the establishment of the euro against the dollar overnight also refresh the 11-week low of 1.2969. At the same time, Standard & Poor’s rating agency said it is possible to cut the Portuguese sovereign debt rating.

European debt to calm markets worried about the further spread of the crisis, the European Central Bank President Jean-Claude Trichet said the European leaders investors underestimated the determination to maintain financial stability in the euro zone, European Central Bank may buy more large-scale government bonds. U.S. Treasury Deputy Minister of International Affairs this week Lael Brainard also visit Spain.

S & P to Portugal on negative watch list

On Tuesday, the euro area bond market extended Monday’s decline, which means that EU governments last Sunday with the International Monetary Fund (IMF) for Ireland’s 85 billion euros rescue plan and a new mechanism for the establishment of permanent relief to investors still disappointed.

Germany and other EU governments had hoped that these two measures will allow over Europe a few weeks of the debt crisis of panic subsided. But it did not, the Irish crisis has hit the market an unprecedented crisis of confidence.

But analysts say that, pushing Germany’s new permanent relief mechanism of this almost “fuel”: so that investors anticipate the future will have to bear the loss, so their government can not breach European countries ” disillusioned, “Portugal and Spain led to rising borrowing costs, thus letting the two countries need to increase the possibility of rescue.

At the same time, the rating agencies seize the opportunity to “fan the flames.” Standard & Poor’s said Tuesday it will Portugal “A-/A-2” rating on negative watch list, and may lower the Portuguese “A-” long-term foreign currency sovereign credit rating. S & P said the Portuguese Government of Portugal on negative watch reflects the risk of possible financial aid official for help, and if a further weakening of growth prospects in Portugal, or when the financial assistance program for private creditors to subordinate the public interests of the creditors, then it may cut the credit of Portugal rating.

Prime Minister Jose Socrates of Portugal under the weight of 30 November once again denied the country faces to seek international financial assistance from the enormous pressure. Recently, Socrates has been hard to make a statement, saying that Portugal can rely on their own financial strength, to avoid reduced after the Greece and Ireland, following the “next” euro-zone countries in need of assistance.

European and American governments have “fire”

In order to alleviate the debt crisis of the current market investors, or spread to other countries, concerns about the euro zone, Trichet warned on Tuesday that the European market should not underestimate the resolve escalating crisis in the determination of the euro area. He hinted that the ECB may significantly increase the purchase of government bonds to hold down soaring borrowing costs. There, dealers said the European Central Bank has increased the purchase of bonds in Portugal.

Jean-Claude Trichet said the European Parliament the same day, the bond program, “still ongoing” and its future by the Executive Committee on December 2 meeting in Frankfurt to discuss the decision. Trichet refused to rule out the euro zone countries the possibility of joint bond issuance, although the European Central Bank did not agree with this.

Debt crisis in the face of a sharp deterioration in Europe, the U.S. Treasury has also decided to send a special envoy to visit Spain. U.S. Treasury Department on Nov. 30, said in a statement, Lael Brainard will meet this week, Spain, Germany and France, senior government officials. The United States will urge the EU full control of contagion, and discuss the extension of investor confidence may affect short-term policy adjustments.

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