Portugal pays higher rate to raise 1bn euros

The government had to tap the financial markets to raise money to repay loans.

But Lisbon is paying yields of 5.1% and 5.9% to borrow money for six and 12 months, against the 3% and 4% it was paying to borrow last month.

Caretaker Prime Minister Jose Socrates is due to make a statement later after his finance minister said the country needs to resort to aid from the EU.

"In this difficult situation, which could have been avoided, I understand that it is necessary to resort to the financing mechanisms available within the European framework," Fernando Teixeira dos Santos said.

His comments were reported in the online edition of business daily Jornal de Negocios and were confirmed by a finance ministry spokeswoman.

Source:BBC