World financial news

Colliers International in St. Louis added Steven J. Tharpe as executive vice president. He will focus on development of an aggressive growth plan for the next two to three years.

Tharpe has been active in the St. Louis commercial real estate market since 1976, most recently with Discovery Group. His areas of expertise include tenant and buyer representation, investment brokerage and corporate facilities.

He serves on the board of Certified Commercial Investment Members St. Louis Chapter and is its 2011 board president. He also serves on the board of Midwest Bankcentre Inc. He also has served on a wide variety of civic, industry and social boards.

He is a St. Louis native and a graduate of the University of Missouri Columbia.

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The stock market buckled Monday under the weight of a crisis in Europe and danger of recession at home. Reeling from a downgrade of American debt, the Dow Jones industrials plunged 634 points.

It was the worst day for the market since the financial crisis in the fall of 2008 and extended Wall Street’s sudden, sharp decline. Stocks have lost 15 percent of their value in just two and a half weeks.

Monday was the first trading day since Standard and Poor’s downgraded the United States’ risk-free credit rating, and the selling started at the opening bell. The Dow dropped 250 points in minutes. For the rest of the day, investors looked for safer places for their money. With few buyers left for stocks, the market could only drift lower.

The Dow finished the day down 5.5 percent. The point decline was the worst since Dec. 1, 2008, and the sixth-steepest ever. The average ended at 10,809.85, its first close under 11,000 since November.

In a bit of irony following the S&P downgrade, investors decided U.S. debt was one of the safest places to be. They also sought refuge in gold, which set a record price.

“The S&P downgrade of U.S. government debt is the least of our problems,” said economist Scott Brown at Raymond James & Associates. “The bigger worry is subpar economic growth and the threat of a new recession.”

Economists at Goldman Sachs peg the chances of another recession at one in three, most likely in the next six to nine months. The threat was barely talked about earlier this summer.

The U.S. economy grew at a feeble 0.8 percent annual pace the first half of 2011, its slowest since the end of the Great Recession in June 2009. Manufacturing and consumer spending have slowed dramatically.

Oil prices plunged 6 percent to the lowest price of the year Monday _ $81.31 a barrel. Investors predict a weakening economy means that consumers and businesses will buy less gasoline.

The turmoil in the U.S. markets was the end of a daylong rout that swept the world. Stocks lost 4 percent in South Korea and 2 percent in Japan, then 5 percent in Germany and 4 percent in France.

In the U.S., stocks fell even though Moody’s, another major credit rating agency, stood by its top rating of Aaa for the United States. It said it could downgrade the U.S. if it did not cut its deficit, “but it is early to conclude that such measures will not be forthcoming.”

Financial markets were not comforted by an afternoon statement by President Barack Obama, who said Washington needs more “common sense and compromise” to tame its debt.

“Markets will rise and fall,” he said. “But this is the United States of America. No matter what some agency may say, we’ve always been and always will be a triple-A country.”

Across the Atlantic, policymakers struggled to contain a debt crisis of their own. The threat of default has spread from relatively small countries like Greece and Portugal to bigger ones _ Italy and Spain.

If those countries failed to meet their debt payments, Italian and Spanish banks would absorb losses on their holdings of their countries’ government bonds.

Then the pain could spread outward _ to foreign banks that made loans to Spanish or Italian banks and beyond.

The European Central Bank stepped in Monday, buying billions of euros’ worth of Italian and Spanish bonds to drive down dangerously high interest rates. But the move does nothing to address the underlying problem: huge Italian and Spanish debts that could require a bailout and strain the resources of the European Union.

S&P added to the anxieties Friday night by downgrading long-term U.S. government debt _ Treasury securities with maturities of more than a year _ by one notch, from AAA to AA+.

Then on Monday, it downgraded the credit ratings of Fannie Mae, Freddie Mac and other government agencies that rely on the creditworthiness of the federal government cash advance in one hour.

In withdrawing the top credit rating, S&P blamed political paralysis in Washington. Republicans and Democrats agree on the need to reduce massive annual budget deficits that have left the United States holding $14.3 trillion in debt. But they can’t agree how to do it. Republicans refuse to raise tax revenues, and Democrats resist cuts to social programs such as Medicare and Social Security.

But in their first opportunity to buy long-term Treasurys after S&P declared them riskier, investors paid a premium for them. The yield on 10-year Treasury bonds fell to 2.34 percent Monday from 2.56 percent Friday as investors bid prices up.

“What you’re seeing amply demonstrated today is that, should there be any question about the stability of the global economic backdrop, the U.S. dollar rises in value, and Treasurys are still the pre-eminent flight-to-quality security in the world markets,” said Robert Tipp, chief investment strategist with Prudential Fixed Income.

The drop in Treasury yields signals that investors are more worried about slowing growth than they are about the credit risk posed by the U.S. government. Investors showed Monday that nothing has shaken their confidence that the U.S. will pay its creditors.

Many investors flee to Treasurys when there are signs economic growth is deteriorating. Steven Major, a strategist at HSBC Bank, said 10-year yields could drop as low as 2 percent if the U.S. stumbles back into recession. It fell as low as 2.06 percent during the financial crisis in 2008.

S&P’s decision does pose one risk, said Jan Hatzius, Goldman Sachs’ chief economist: It could force the U.S. government to cut spending and reduce its budget deficit faster than it would otherwise.

Hatzius is already forecasting that cuts in government spending could reduce U.S. growth by 1 percentage point in 2012. Overall, the U.S. economy is likely to grow a meager 2 percent to 2.5 percent through next year, Hatzius said in a conference call Monday.

But the pressure on policymakers to reduce government deficits could lead to additional steps that will slow growth. For example, the White House and Congress could allow a cut in Social Security taxes to expire at the end of this year, as scheduled. That could subtract another one-half percentage point from the economy’s growth rate, Hatzius said, and raise the risk of a recession.

Government spending cuts, especially at the state and local level, are already a drag on economic growth. From April through June, public cuts lowered economic growth, which was running at a weak 1.3 percent annual rate, by 0.23 percentage points.

Since the federal government seems unlikely to do much to stimulate the economy, attention is turning again to the Federal Reserve, which meets Tuesday.

Doug Roberts, chief investment strategist at Channel Capital Research, said the weakening economy and international turmoil mean the odds have “increased substantially” that the Fed will ultimately announce a new round of bond purchases designed to jolt the economy by pushing down long-term interest rates. The Fed ended a $600 billion bond-buying program in June.

“What’s rocking the market is a growth scare,” said Kathleen Gaffney, co-manager of the $20 billion Loomis Sayles bond fund.

She said the market is worried not about the downgrade but about how the U.S. and Europe will grow their way out of their debt problems.

“The gravity of the situation won’t be dealt with until the market continues to riot to get their attention,” she said.

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Marlboro maker Altria Group says its net income fell about 57 percent in the second quarter on charges related to lease transactions by one of its subsidiaries.

The owner of the nation’s biggest cigarette maker, Philip Morris USA, reported Wednesday that it earned $444 million, or 21 cents per share, for the period ended June 30. That’s down from $1.04 billion, or 50 cents per share, last year.

Excluding one-time items, earnings were 53 cents per share, matching analyst estimates.

But revenue, excluding excise taxes, tumbled nearly 8 percent to $4 billion. Analysts expected revenue of $4.36 billion

The company, based in Richmond, Virginia, says it sold less than one percent fewer cigarettes than a year ago and 2 percent less smokeless tobacco like Copenhagen and Skoal.

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The U.S. trade deficit surged in May to the highest level in more than two and a half years, driven upward by a big increase in oil imports.

The Commerce Department says the deficit increased 15.1 percent to $50.2 billion in May. That’s the largest imbalance since October 2008.

Exports declined 0.5 percent to $174.9 billion. Imports rose 2.6 percent to $225.1 billion.

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Why buy a bookstore?

John Malone, who made a fortune in cable television, is offering $1 billion for Barnes & Noble _ trying to jump into a business so sick that its No. 2 competitor, Borders Group Inc., is on life support.

The difference is that Malone and his Liberty Media conglomerate aren’t betting on the books-and-mortar past, analysts say, but the promise of the electronic future.

Barnes & Noble’s Nook electronic reader now accounts for 28 percent of the market for those devices. And the Nook has the potential to go beyond books to deliver all types of digital products, including music, magazines, TV shows and movies. That makes it a competitor not just to Amazon.com’s Kindle but also to Apple’s iPad.

“This deal is all about the device,” said Sherif Mityas, a partner in the retail practice of global management consulting firm A.T. Kearney. “As Apple proved, you need to have the content and the device. Malone has the content, and Barnes & Noble has the device. You’re not buying the stores; you’re buying the Nook.”

Malone’s empire, Liberty Media Corp., operates three publicly traded companies _ Liberty Interactive Inc., Liberty Starz Group and Liberty Capital Group _ through which it runs home-shopping network QVC and movie channel Starz. It also holds stakes in numerous other online, media and communications companies. Some believe that QVC could be used as a marketing vehicle for Barnes & Noble’s Nook.

With the backing of a media conglomerate, Barnes & Noble’s digital business would be able to compete better with Amazon, Apple and others, said Gary Balter, a retail analyst at Credit Suisse.

Barnes & Noble’s 700 stores may appear to be an albatross. But they could be transformed into places that highlight mostly digital devices and content and mimic Apple’s successful stores. Barnes & Noble has already cleared space at the front of its stores to display the Nook and push e-books.

“You don’t want the old-fashioned bookstore customer who goes in and sits and reads a book for two hours. You want people going in there who are hungry for experience,” said Richard Hastings, a consumer strategist with Global Hunter Securities.

Barnes & Noble’s shares surged almost 30 percent on Friday and passed Liberty’s bid of $17 a share in cash, closing at $18.33. The companies haven’t yet signed an agreement, and the deal is still subject to closing conditions, including one that founding Chairman Leonard Riggio keep a stake in the company and remain in a management position, Barnes & Noble said.

Barnes & Noble reiterated Friday a committee of its board is evaluating the offer.

Barnes & Noble had put itself up for sale in August in response to pressure from billionaire activist shareholder Ron Burkle, but the company didn’t find much interest.

Traditional book sellers have been facing increasing competition from online retailers like Amazon.com and discounters like Wal-Mart Stores Inc. And heavy readers are quickly embracing e-books.

Right now, though, Simba Information senior trade analyst Michael Norris estimates there are still at least five print book buyers for every e-book buyer cash advance to savings account.

Still, the industry thinks e-books are the future. Amazon.com said Thursday that, after less than four years of selling electronic books, it’s now selling more of them than printed books. Stores have cut shelf space devoted to printed books by 15 percent over the past year, estimated Mike Shatzkin, CEO of Idea Logical, a book consulting company. Last year, he predicted that it would take five years for stores to cut space for printed books by 50 percent; now, he believes it will only take about three.

The shift has already rocked Borders Group, which filed for bankruptcy court protection in February. It has been closing stores and is reportedly in talks to sell more than half of those that remain.

While Barnes & Noble has done better than Borders, its quarterly results have been weighed down by large investments in its online and e-reader businesses. Barnes & Noble reported growth in its online store in the most recent quarter, and said both that and its bricks-and-mortar stores were helped by sales of its Nook e-reader.

Last month, Barnes & Noble added an app store and an e-mail program to its Nook Color e-reader. That brings the $249 device closer to working like a tablet computer like the iPad, which sells for twice as much. Barnes & Noble is expected to announce a new version of the Nook next week, though it hasn’t said what features it will include.

Clearly, there are concerns. Norris says he would like assurance from Liberty that it’s not going to look at the Nook in “a vacuum” and get rid of the stores.

“Its success has been (tied) with the physical bookstores because people are not giving up physical books,” he added.

No one know knows exactly what Malone, 70, has in mind. He has typically been a pure investor, like Warren Buffett or a private equity firm, who buys companies when they are cheap and on the brink of financial ruin.

Malone doesn’t have a history of putting together grand technological schemes, said Wedge Partners analyst Martin Pyykkonen. He called Malone a “financial engineer” who demands excellent returns, keeps management in place and reaps rewards when the business returns to health.

It could be there is no grand plan with Barnes & Noble, either, besides closing unprofitable stores and otherwise improving profitability. One thing that is similar with other Malone investments is Barnes & Noble’s big share of its market, which could get bigger if Borders Group closes or sells more stores.

“Malone’s style is to very quietly, very patiently look and watch, and when things get to his threshold level, then make his move,” Pyykkonen said. “But he makes his move in a generally quiet, friendly, cooperative way, because he actually wants management to stay in there and keep running the company.”

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Dominique Strauss-Kahn’s bail hearing Friday could spell the end of his leadership of the International Monetary Fund.

If a New York judge denies bail for Strauss-Kahn or imposes highly restrictive conditions on his freedom, the IMF’s executive board would expect him to resign, two senior IMF officials said Wednesday. If he didn’t, the board could remove him on the grounds that he couldn’t lead the IMF from a jail cell or far from its Washington headquarters.

The two officials spoke on condition of anonymity because of the highly sensitive situation. Strauss-Kahn is jailed in New York City on charges of sexually assaulting a hotel maid.

No action is foreseen before Friday’s court hearing. Attempts to reach Strauss-Kahn’s lawyers were unsuccessful. The Frenchman hasn’t said whether he’ll yield to rising international pressure for his resignation.

One of the IMF officials said the fund had yet to speak with its managing director since his weekend arrest. The IMF has appointed an interim chief, but there are no procedures for suspending or placing its leader on extended leave.

As a result, any prolonged legal troubles would mean that Strauss-Kahn would have to resign to avoid being ousted by the 24-member board. The board can meet whenever it wants to decide on Strauss-Kahn’s future, the official said.

The other IMF official said the board will insist on a meeting Friday after the court hearing. The board can remove Strauss-Kahn without cause, the official noted.

While Strauss-Kahn remains confined to a Rikers Island jail cell, the dividing lines are sharpening in a dispute over whether someone from a rich or an emerging economy should lead the IMF after his exit.

Europe is aggressively staking its traditional claim to the top position. But fast-growing nations such as China, Brazil and South Africa are trying to break Europe’s grip on an organization empowered to direct billions of dollars to stabilize the global economy.

Europeans have led the IMF since its inception after World War II. Americans have occupied both the No. 2 position at the IMF and the top post at its sister institution, the World Bank. The World Bank funds projects in developing countries.

Europe has “an abundance of highly qualified candidates” to lead the IMF, German government spokesman Christoph Steegmans declared Wednesday. He also noted the relevance of having a European at the helm, to deal with the debt problems that have racked the eurozone.

Steegmans didn’t name any potential candidates or say whether Germany might propose one. But German Chancellor Angela Merkel, along with the finance ministers of Sweden and the Netherlands, have pressed Europe’s case for the IMF leadership.

Still, developing nations see Europe’s stranglehold on the position as increasingly out of touch with the world economy. China’s is now the world’s second-largest economy. India’s and Brazil’s have cracked the top 10. Many emerging economies are sitting on stockpiles of cash and have become forces of financial stability, while rich countries have become weighed down by debt.

“We must establish meritocracy, so that the person leading the IMF is selected for their merits and not for being European,” Brazilian Finance Minister Guido Mantega said, calling for a “new criteria” for leadership. “You can have a competent European … but you can have a representative from an emerging nation who is competent as well.”

China suggested it was time to shake things up at the IMF, with Foreign Ministry spokeswoman Jiang Yu saying the leadership “should be based on fairness, transparency and merit.”

And South African Finance Minister Pravin Gordhan spoke in stronger terms. He said the new director should come from an emerging economy, to “bring a new perspective that will ensure that the interests of all countries, both developed and developing, are fully reflected in the operations and policies of the IMF.”

It remains unclear which way the United States is leaning. Treasury Secretary Timothy Geithner said Tuesday that Strauss-Kahn is “obviously not in a position” to run the IMF, escalating the pressure on the 62-year-old economist.

The United States has a major say in determining who will head the fund, in part because it holds the largest number of votes. The prevailing view among analysts and former Treasury officials appears to be that Washington would back a strong European candidate who could be approved in a smooth process.

“It’s kind of not our fight,” said Phillip Swagel, a Treasury official in the George W. Bush administration. “There are very good reasons to have a forceful, prominent European head of IMF.”

One such candidate would be French Finance Minister Christine Lagarde.

Other Europeans touted as possibilities are Germany’s former central bank chief Axel Weber; the head of Europe’s bailout fund, Klaus Regling; and Peer Steinbrueck, a former German finance minister.

Candidates from elsewhere include Turkey’s former finance minister, Kemal Dervis; Singapore’s finance chief Tharman Shanmugaratnam; and Indian economist Montek Singh Ahluwalia.

More possibilities include Trevor Manuel, South Africa’s former finance minister; Mexico’s central bank governor, Agustin Carstens; and former Brazilian central bank president Arminio Fraga.

Strauss-Kahn was removed from a plane Saturday at John F. Kennedy International Airport, moments before he was to fly to Paris. He was supposed to meet Sunday with German Chancellor Angela Merkel to discuss aid to debt-laden Greece and then join EU finance ministers in Brussels on Monday and Tuesday.

Strauss-Kahn’s flight from Washington was paid for by the IMF, with an approved stopover in New York, the official said. That meant his New York visit was in a private capacity. He was not accompanied by security personnel or any IMF aides.

The official said Strauss-Kahn’s security team was supposed to meet him at Paris’ Charles de Gaulle airport. His assistants were already in Europe.

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Pakistan’s former foreign minister called on the country’s president and prime minister to resign Saturday following the American raid that killed Osama bin Laden, one of the highest-profile calls so far for senior officials to be held accountable.

Some Pakistanis have focused their anger on the country’s powerful army and intelligence chiefs. But former Foreign Minister Shah Mahmood Qureshi said President Asif Ali Zardari and Prime Minister Yousuf Raza Gilani are the ones who should be held responsible.

“This is a great violation of our sovereignty, but this is for the president and prime minister to resign and no one else,” said Qureshi in an interview with Geo TV.

Qureshi is now a lawmaker for the ruling Pakistan People’s Party.

He has said he was pushed out of his position as foreign minister in February after he clashed with party officials over the case of Raymond Allen Davis, a CIA contractor who shot and killed two Pakistanis in the central city of Lahore, apparently in self-defense.

Qureshi insisted Davis did not enjoy blanket diplomatic immunity, but he was ultimately released after the families of the victims were compensated.

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Dining out will cost more this year as U.S. restaurants take advantage of the nearly two-year long expansion to boost prices on food and drinks.

Higher-priced menus reflect growing confidence by eateries that consumers can afford to pay more to eat out. Restaurants are emboldened in part by the success of U.S. airlines, which have raised fares almost 10 percent since a year ago, according to Dean Maki, chief U.S. economist at Barclays Capital in New York.

“The fact that the airline industry was able to pass along cost increases signals that the pricing environment has become somewhat more favorable than it was during the heart of the recession,” Maki said. “It’s more likely restaurants will be able to pass along price increases now relative to the last few years.”

Higher food and fuel costs are spurring menu changes, which are reflected in the food-services category of the personal- consumption-expenditures price index. Purchased meals and beverages, which make up about 6 percent of core PCE, rose nearly 2 percent in March from a year ago, the biggest increase since November 2009, according to data from the Bureau of Economic Analysis in Washington.

Several apparel companies — including San Francisco-based Levi Strauss & Co., which supplies jeans to retailers in more than 110 countries — also have announced increases to offset higher costs for cotton, foreign wages and freight. With imported-clothing prices rising at the fastest rate in at least a decade, retailers stand a better chance of exerting pricing power, Maki said.

Pressure on the Fed

All this is putting pressure on the Federal Reserve to prevent inflation from getting out of hand, said Samer Nsouli, chief investment officer in New York for the Lyford Group Macro Fund.

“Inflation hawks see restaurants and airlines passing through higher prices and say the Fed’s behind the curve,” Nsouli said. “The Fed’s not paying enough attention to such trends when it comes to its continued accommodative monetary policy.”

The central bank’s Federal Open Market Committee said it “will pay close attention to the evolution of inflation” in the statement for its April 27 meeting, when it kept the target for the federal funds rate, or overnight inter-bank lending rate, at zero to 0.25 percent. It first set the rate at the record low in December 2008. The Fed also reaffirmed at the April meeting its plan to complete a $600 billion Treasury purchase program by June.

‘Transitory’ Threat

Fed Chairman Ben S. Bernanke and his chief deputies on the FOMC — Fed Vice Chairman Janet Yellen and New York Fed President William C. Dudley — have said in recent speeches that the committee’s leadership believes the threat from accelerating prices will prove “transitory.” Even so, policy makers have been bumping up their forecast for 2011 core inflation, which excludes food and fuel. The April projection is about 1.5 percent, compared with about 1.2 percent in January.

Restaurants have projected menu increases of 1.8 percent during the next six months, the most in a year, according to research by RBC Capital Markets. The amount depends on the type of food they serve, said Larry Miller, an RBC analyst in Atlanta. In the same period, the companies are forecasting a rise of at least 3.2 percent in their commodity costs, the research showed.

The industry’s ability to pass along higher input costs depends on diners’ ability to pay more. While the unemployment rate fell to 8.8 percent in March from a post-recession peak of 10.1 percent in October 2009, other consumer gauges have been mixed. The Bloomberg Consumer Comfort Index fell to minus 45.1 in the week ended April 24, the first decline in a month.

‘Decent’ Trends

Customer traffic still has improved from last year and “trends have been decent in terms of demand, so restaurants have a little more confidence to raise prices,” Miller said.

The Standard & Poor’s Supercomposite Restaurants Index, which includes McDonald’s Corp. (MCD), The Cheesecake Factory Inc. (CAKE) and 25 other companies, has risen by 42 percent since December 31, 2007, while the S&P 500 Index has declined by 9 percent.

McDonald’s boosted menu prices in the U.S. by 1 percent in March, Chief Financial Officer Peter Bensen said on an April 21 conference call. The Oak Brook, Illinois-based fast-food chain had resisted such a move since 2009, said Miller, who upgraded McDonald’s stock in January to “outperform” from “sector perform.”

“Our upgrade was driven by the belief that fast-food models, like McDonald’s, thrive in a modest inflationary environment and that they would be able to successfully implement price increases in 2011,” Miller said.

Energy Costs

BJ’s Restaurants Inc. (BJRI) expects to boost menu prices for the full year by about 3 percent to offset rising food and energy costs, Chief Executive Officer Gerald Deitchle said on an April 20 conference call. Like McDonald’s, the Huntington Beach, Calfornia-based company didn’t raise prices the past few years at its namesake brewery, pizza and grill chains, Deitchle said.

Cheesecake Factory, based in Calabasas Hills, California, is monitoring input costs after rolling out a 0.7 percent rise at its 150 casual-dining restaurants earlier this year, Chief Financial Officer Douglas Benn said on an April 20 conference call. The company currently projects a further boost of at least 1.4 percent later this year, he said.

“We will implement a higher level of menu-price increases in our upcoming summer menu change if commodity-cost pressures continue at the current level,” Benn said.

Food Quality

Cheesecake Factory, BJ’s and McDonald’s are among a group of “haves,” according to Steve West, an analyst at Stifel Nicolaus & Co. in St. Louis. These are restaurants that can push through moderate price changes, though they likely won’t be menu-wide, West said. He includes Chipotle Mexican Grill Inc. (CMG) in this group because it has focused on improving food quality and the customer experience during the recession.

“If anyone has pricing power, it’s Chipotle,” said West, who maintains a “buy” rating on the stock.

The Denver-based burrito chain, which McDonald’s spun off in 2006, will wait to raise prices until the third quarter, allowing it time to “see the magnitude and timing of inflation and assess the customer reaction to price increases at other restaurants,” Chief Financial Officer John Hartung said on an April 20 conference call.

The restaurant industry will serve as a test of the retail sector’s pricing power, Maki said.

‘Stronger Position’

“Consumers are in a stronger position now because their labor income has been improving, but the surge in gasoline prices has moderated the recent growth in their purchasing power,” Maki said.

For Yum! Brands Inc. — the Louisville, Kentucky-based owner of KFC, Pizza Hut and Taco Bell fast-food chains — potential price changes in this environment are a balancing act, Chief Financial Officer Richard Carucci said on an April 21 conference call.

“When you have inflation and our sales are soft, you have to play it pretty smartly,” Carucci said.

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A Japanese nuclear safety official says it could take several months to get the country’s tsunami-ravaged nuclear plant under control.

The Fukushima Dai-ichi nuclear plant has been leaking radiation since the March 11 earthquake and tsunami.

Nuclear safety agency spokesman Hidehiko Nishiyama says officials will face a crucial turning point in the next few months but even that won’t be the end.

He says that in order for reactors at the plant to be under control, a cooling system incapacitated by the tsunami must be restored and engineers must stop radioactivity from being released into the air and the ocean cash advance no fax.

This is the first time Nishiyama has provided a rough estimate of how long the effort to control the plant might take.

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The leader of Portugal’s main opposition party says the minority government’s downfall is “inevitable” after it failed to win political support for its latest plan to cut the country’s huge debt burden.

Portugal is trying to avoid becoming the latest of the 17 eurozone countries to need a bailout, following financial aid for Greece and Ireland last year.

But all opposition parties have balked at the Socialist government’s new austerity measures, which are expected to be rejected by Parliament even though European leaders praised them.

Pedro Passos Coelho, leader of the main opposition Social Democratic Party, said late Monday that the political deadlock made an early election unavoidable.

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