Portugal, Europe Debt Crisis | featured news

EU finance ministers agreed to allow Portugal and Ireland to repay their bailout loans later than initially agreed, in a bid to help the two governments wean themselves off bailout money in the coming year.

Serving a frugal lunch in their kitchen not much bigger than a bathroom, Pedro and Elena Baptista spoon stewed chicken feet onto their boiled potatoes and leave the slightly meatier wings for their 12-year-old daughter, Vania, and 7-year-old son, Joao.

German Chancellor Angela Merkel praises Portugal's resolve in tackling its debt crisis, but faces angry anti-austerity protesters in Lisbon.

Tens of thousands of Spaniards and Portuguese rallied in the streets of their countries' capitals Saturday to protest enduring deep economic pain from austerity cuts.

To every Portuguese, the town of Grandola is a cradle of the 1974 revolution that ended decades of dictatorship, but nowadays it is hard to find even a spark of revolt here against the worst economic hardship in the country's recent history.

Rating agency Fitch downgraded Portugal's rating to junk status on Thursday, citing large fiscal imbalances, high debts and large fiscal imbalances.

The Portuguese government is planning the country's biggest spending cuts in 50 years, a move it described as "unprecedented".

Portugal will elect a new government on Sunday which will lead the country through a period of deep austerity and recession after it received a 78-billion-euro ($114 billion) bailout from the European Union and IMF.

Euro zone finance ministers are ready to back an EU/IMF bailout of Portugal at a Monday meeting overshadowed by the arrest of International Monetary Fund chief Dominique Strauss-Kahn on sexual assault charges.

Portugal launched talks on Tuesday with European authorities and the IMF on a bailout the caretaker government said it needs to pay the country's dues from June, as politicians jostled ahead of a general election.