EUROPE’S DEBT MARKET jitters flared up again today – an ill omen on the eve of a summit where EU leaders plan to complete their crisis-fighting plan – as investors worried particularly about the near-term fates of Portugal and Ireland.

After eurozone countries hammered out the main cornerstones of their crisis strategy over the past couple of weeks, investors are turning their eye back toward the region’s stragglers and how they will cope with painful austerity measures.

Portugal’s minority government could fall if lawmakers fail to back the latest austerity package later today. That would put Lisbon into political limbo just as it faces huge debt repayment deadlines and desperately needs markets’ confidence.

In Ireland, the results of stress tests due next week will reveal the true extent of capital needs at the countries’ struggling banks, which the government has already warned will exceed €10bn.

Dublin wants more help with the costs of restructuring and recapitalizing its banks, threatening to burn senior bondholders — who have so far been spared in Europe’s debt crisis — if none is forthcoming.

At the same time, Enda Kenny’s new government is not making many friends among its eurozone counterparts by continuing to refuse changes to its rock-bottom corporate tax rate even while demanding lower interest rates on its €67.5bn bailout agreed in November.

The rising tension in Ireland and Portugal is drawing investors back to Europe’s debt crisis after a couple of weeks when most attention has been centred on Libya and Japan.

The signals from the bond markets are that they don’t like what they’re seeing. The yield — or interest rate — on Portugal’s ten-year bonds was up 0.10 of a percentage point at 7.57 per cent, a whisker short of euro-era highs, while Ireland’s yield is up 0.08 percentage point to 9.91 per cent.

- AP