Portugal political crisis talks break down

Socialist opposition leader Antonio Jose Seguro. 2 July 2013
Image caption Socialist leader Antonio Jose Seguro said his party's proposals were rejected

A week of talks by Portugal's three main parties on how to end a political crisis has broken down, leaving the country's bailout programme in doubt.

President Anibal Cavaco Silva is seeking a "national salvation" deal to back austerity policies demanded by EU and IMF lenders.

But opposition leader Antonio Jose Seguro said the governing coalition had rejected most of his party's proposals.

He said it was now up to the president to decide how to end the crisis.

It began nearly three weeks ago with the resignation of the finance and foreign ministers.

Foreign Minister Paulo Portas was unhappy with the extent of the austerity measures needed to comply with the conditions set in the 78bn euros ($102bn; £67bn) bailout received in May 2011.

Finance Minister Vitor Gaspar - seen as the architect of austerity - quit because of a lack of support for his approach.

Lisbon has had to request a delay in the eighth review of the bailout by its creditors. The review was due to start last Monday but has been put back until the end of August or early September.

Coalition parties made no comment in the immediate aftermath of the talks on Friday.

However, socialist leader Mr Seguro told reporters: "There were two different visions to exit the crisis. That being clear, it made no sense to continue negotiating for the sake of negotiating."

Analysts say the president could still avoid an escalation of the crisis by keeping the governing coalition in place rather than calling a snap election.

The austerity cuts are widely blamed for keeping Portugal in recession over the past two years, angering trade unions and left-wing parties and causing a wave of street protests.

On Friday, Portuguese government bonds had outperformed others in Europe on hopes of a deal.

The BBC's Alison Roberts in Lisbon says there are now fears that the markets will take a tumble on Monday.

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