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Gaspar's resignation hits Portugal's bonds

Gaspar's resignation hits Portugal's bonds
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The Portuguese government’s cost of borrowing has risen after the country’s finance minister quit, as did the cost of insuring its debt against default .

Vitor Gaspar, the architect of the austerity drive there under an EU/IMF bailout, said he had stepped down on Monday because of declining public support for it.

Analysts said that sends a message Lisbon is in a difficult position in implementing the terms of the bailout which will likely mean some renegotiation of the terms.

Gaspar’s surprise resignation is a potential blow to the planned exit from that rescue programme, even though the government said on Tuesday that it will stick with the domestically unpopular austerity.

The rise in bond yields was, however, capped by the swift decision to replace Gaspar with Treasury Secretary Maria Luis de Albuquerque, who is seen as a credible technocrat and supporter of the austerity programme.