Portugal, Europe Debt Crisis | featured news

Ratings agency Standard & Poor's downgraded two of the euro zone's most troubled member states, citing fears that the pair may have to restructure their debt after 2013.

European Central Bank policymakers underscored the case for an April rate hike on Thursday as Portugal's political crisis raised the prospect of another spell of reluctant ECB bond market intervention.

Portuguese Prime Minister Jose Socrates resigned Wednesday and warned of grave consequences for the country after parliament rejected his government's latest austerity measures aimed at avoiding a bailout.

Portugal was put on notice on Tuesday that its credit rating could be cut and fellow euro zone debtor Spain had to pay more to issue new debt, suggesting the currency bloc's crisis will rage unabated in 2011.

The budget plan for 2011 is aimed at reassuring nervous lenders that the country can avoid a bailout by meeting its deficit-cutting targets.