Portugal's PM resigns

Portugal's prime minister, Jose Socrates, resignedWednesday after theparliament voted against government austerity measures aimed at avoiding a European Union bailoutof the debt-burdened country.

Socrates had said he would not be able to run the country if the plan was defeated.

Hisresignation placed Portugal in political limbo just as it faces huge debt repayment deadlines and desperately needs the confidence of markets. It came the day beforea two-day summit in Brussels, where EU leaders are to complete theirplan for fighting the euro zone's debt crisis.

All opposition parties rejected the government's latest proposals for spending cuts and tax hikes.

The euro fell 0.4 per cent, to $1.4082 US.

Many analysts expected the government's parliamentary defeat to lead to elections in May or June.

The setback could thwart efforts by European leaders to persuade nervous investors that all is well in the euro zone and see Portugal accepting financial assistance like Greece and Ireland last year.