Portugals lenders to visit as Greek turmoil rocks EU

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Portugals lenders to visit as Greek turmoil rocks EU

ISBON (Reuters) - Portugal's international lenders will begin a visit to assess progress on the country's 78 billion euro bailout program next Tuesday, the government said, as fears of new contagion and a Greek exit from the euro zone grip Europe.
The Diario Economico business newspaper http://www.engagedress.com/dresses-casual_dresses-maxi_dresses-clothes.html said on Thursday, without citing sources, that the mission was also likely to prepare a contingency plan for Portugal in case Greece leaves the euro zone. But a European Commission source dismissed the report."There is no intention to discuss any type of contingency plans for Portugal. The adjustment program per se is a contingency plan protecting Portugal from the risk of contagion," the source said.Speculation is rampant that Greece may be forced out of the euro zone after its voters turned their backs on the parties backing the country's bailout program in an inconclusive election earlier this month. A second election on June 17 is being seen as a test of the country's will to remain in the currency union.Portugal, meanwhile, is struggling through its worst recession since the 1970s and unemployment is at an all-time high in the data series at nearly 15 percent - higher than envisioned in the bailout plan.Still, its first-quarter economic contraction of just 0.1 percent was smaller than expected.A source close to the evaluation mission told Reuters the team will try to separate Portugal's own performance, which has been lauded so far by the "troika" of lenders, from the worsening European economic situation."The troika will focus on separating the progress within the bailout framework from international developments. Otherwise there would be too many parameters to be taken into account, and the mission would never get out of here," the source added.It will be the European Commission, the European Central Bank and the International Monetary Fund's fourth quarterly evaluation of Portugal's bailout program, which began a year ago.Portugal remains the euro zone's second-most risky country after Greece. Still, Portuguese 10-year bond yields have risen only moderately to 11.8 percent on Thursday from last week's lows of below 11 percent, remaining far below record highs of over 17 percent seen in January.The Portuguese government said on Thursday the evaluation mission should last approximately two weeks.(Reporting By Andrei Khalip and Daniel Alvarenga; Editing by Hugh Lawson) World Greece Portugal

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