Portugal slams financial speculation

Paris - Portuguese Prime Minister Jose Socrates slammed market speculation targeting his country ahead of a major summit on the eurozone debt crisis Friday, insisting it did not reflect financial reality.

Such speculation has "no justification nor any economic grounds," he told reporters in Paris after a meeting with French Prime Minister Francois Fillon ahead of the evening summit in Brussels.

"Portugal today has a public debt lower than the eurozone average," Socrates insisted, despite market concern that Portugal, along with Greece, is among the eurozone countries most at risk from shaky public finances.

Portuguese debt is forecast to reach a huge 86% of output this year, according to government figures.

Fillon said: "Portugal's situation is nothing like that of Greece ... There is no reason to speculate against Spain and Portugal ... These countries' debt is perfectly within the average for the eurozone."

Leaders from the 16 euro countries were due Friday to sign a bailout package for Greece to rescue it from a potential debt default in a crisis that has sent the euro plunging and raised concerns for Portugal and other weak economies.

Socrates said he was "worried for Europe and for the euro."

Economists have warned the euro's very existence could be threatened by a crisis that has also raised fears for Ireland, Italy and Spain, which have similarly high public deficit levels.

Credit rater Standard and Poor's last week downgraded Portugal's long-term debt, raising fears that the country could suffer a crisis similar to Greece's.

On Wednesday another international ratings agency, Moody's, warned that it may downgrade Portugal's sovereign debt within three months, sparking a sell-off on the Lisbon stock market.

Sarkozy and German Chancellor Angela Merkel on Thursday urged EU leaders to crack down on the speculative financial trading blamed for worsening certain countries' sovereign debt, and to examine the role of rating agencies.