Ailing Portugal raises $2.6B in debt auction

Euro notes, currency, money, eurozone

(CBS/AP) LISBON, Portugal - Portugal has managed to borrow almost euro 2 billion ($2.65 billion) at sharply lower prices in a short-term debt auction, despite nagging concerns about its chances of beating a recession.

The government debt agency said it sold 12-month Treasury bills at an interest rate of 3.6 percent and 4-month bills for 2.16 percent amid strong demand.

Austerity measures attached to last year's euro 78 billion bailout have brought a sharp economic downturn, with the government predicting a 3.3 percent contraction this year.

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Portugal needs to generate growth to pay off its debts, and any sign that it may need more aid would trigger a new bout of worries about the 17-nation eurozone's financial health.