by Calculated Risk on 3/22/2011 09:52:00 PM

There is more stress in Europe ahead of the meeting of all 27 EU leaders in Brussels on Thursday and Friday ...
• From the Guardian: Portugal edges towards 'inevitable' bailout from EU partners

Ireland's borrowing costs rose dramatically today in rumour-driven markets as speculation mounted that Portugal was also edging towards a bailout from its European partners.

Troubled Allied Irish Banks was forced to officially denounce widespread rumours that it was set to miss a crucial repayment on one of its bonds ... Portugal was also being battered ahead of a key vote on an austerity budget on Wednesday, which the prime minister José Sócrates is expected to lose.

• From the Irish Times: Borrowing costs rise for Ireland, Greece and Portugal

It does seem a bailout for Portugal is now "inevitable", although the Irish Times notes a Portuguese "caretaker administration might not have legal powers to seek emergency financial aid" ... an interesting twist.