EU leaders gather in Brussels, after Portugal's parliament rejected an austerity budget, prompting the resignation of PM Jose Socrates.

 

The vote means that an international bail-out, similar to those accepted by Greece and the Irish Republic last year, is now far more likely.

 

Mr Socrates said opposition parties had "removed from the government the conditions to govern".

The EU summit was aimed at stopping the eurozone debt crisis from spreading. As part of the deal, the lending capacity of the European Financial Stability Facility (EFSF) would be raised from €250bn (£218bn) to €440bn. The EFSF is due to be replaced by a permanent European Stability Mechanism in 2013.

Portugal faces bond repayments of €4.3m on 15 April and in a national address on Wednesday night, Mr Socrates warned that the political crisis would have "very serious consequences in terms of the confidence Portugal needs to enjoy with institutions and financial markets".

Press release