Irish bonds dumped by investors
Debt costs rise to 11-year high
Investors dumped Irish bonds Wednesday, betting that the country soon could join Greece in seeking a bailout from the European Union.
The selling pushed the interest rate on the country's borrowing to a new high.
The yield on 10-year bonds surged above eight per cent for the first time since the launch of the euro, the European Union's common currency, 11 years ago.
Traders increasingly believe that Ireland soon will be forced to tap Europe's emergency fund created in May for eurozone nations facing a threat of bankruptcy.
Another bailout would send more shock waves through the currency union, which has struggled to find ways to keep individual governments from overspending and threatening the currency's value.
Investors worry not only about what the debt crisis means for Ireland but also to those banks in Britain, Germany, the United States and France that hold Irish debt.
The euro has fallen from recent six-month highs of $1.428 versus the dollar. It traded at $1.3726 Wednesday afternoon, down 0.3 per cent on the day.
PM barely clings to power
Finance Minister Brian Lenihan last week announced plans to slash six billion euros ($8.25 billion) from Ireland's 2011 deficit, double his previous target.
Lenihan said he wants to cut the 2011 deficit to 9.5 per cent and reach the EU's limit of three per cent by 2014.
Overshadowing Ireland's struggle is the question of how long Prime Minister Brian Cowen can cling to power.
Opposition chiefs insist they will vote against the 2011 budget when it's unveiled Dec. 7 in hopes of forcing him from office.
Cowen has a three-vote majority in Parliament that includes highly conditional support from two independent lawmakers.
Cowen's majority is expected to fall to just two votes following a Nov. 25 byelection to fill a seat left vacant for the past 17 months.
With files from The Associated Press