The rating was lowered one step to AA- with a "negative" outlook, Fitch said in a statement today, adding that further economic or fiscal underperformance this year or in 2011 may lead to another downgrade. The euro extended its decline, dropping against all but one of the 16 most-traded currencies. Portuguese stocks and bonds fell.

"A sizeable fiscal shock against a backdrop of relative macroeconomic and structural weaknesses has reduced Portugal's creditworthiness," Douglas Renwick, associate director at Fitch, wrote in the statement from London. "Although Portugal has not been disproportionately affected by the global downturn, prospects for economic recovery are weaker than 15 European Union peers, which will put pressure on its public finances over the medium term."

The governments of Greece, Ireland, Italy and Spain are seeking to narrow budget deficits that have swollen as their economies have been battered by the recession. Portugal's deficit is 9.3 percent of gross domestic product, more than triple the European Union's 3 percent limit. Failure by the EU to agree on a mechanism to help countries shore up their finances has hurt the euro, putting it on course for its worst quarter against the dollar since 2008.

The Portuguese and Greek economies may face a "slow death" as they dedicate a higher proportion of wealth to paying off debt and investors drive up government borrowing costs, Moody's said on January 13. While the two countries can still avoid such a scenario, their window of opportunity "will not be open indefinitely," Moody's said.

"I think it's in an impossible situation," said Donovan, who is based in London, in an interview with Bloomberg Radio today. "Europe has failed to clear its first serious hurdle. If Europe can't solve a small problem like this, how on earth is it going to solve the larger problem, which is the euro doesn't work. It's a bad idea."

European governments have yet to agree on how to fund any rescue for Greece, which says it will struggle to pay its debts at current market interest rates. While Prime Minister George Papandreou announced a 4.8 billion euro ($6.4 billion) austerity package on March 3, the extra yield that investors demand to hold Greek debt over German counterparts has since risen.

Greece is unlikely to default and there will now be a period of "muddling through," Marc Chandler, New York-based global head of currency strategy at Brown Brothers Harriman & Co, told Bloomberg Radio today. In a separate interview, Columbia University Professor Charles Calomiris said it's not "inevitable" Greece will default even though it needs to cut government spending by 25 percent. "A 25 percent reduction is something I've never seen in any country," Calomiris said. "It would require a huge lift."

Europe's fiscal crisis shows the need for the euro region to create a common fiscal policy, former UK Chancellor of the Exchequer Norman Lamont said in an interview in London today. "That would be the logical step," Lamont said. "I don't think they are prepared to do that, and without doing that I think the euro is a contradiction, a currency without a state."

The dollar rallied, while commodities and stocks stumbled, as traders became increasingly frustrated by the still-unresolved Greek debt crisis and after Fitch downgraded Portugal's sovereign debt, reminding investors of the breadth of fiscal woes.

The US was no exception to the sovereign debt concerns. Treasury bonds sold off to a nine-month low as the yield on US 10-year debt rose above the money-market swap yield for the first time. "With high persistent deficits expected to remain, investors have rightly become more concerned about long-term sovereign risks," said Michael Pond, interest-rate strategist at Barclays Capital. "The Treasury-swap spread going negative reminds markets to never say never."

Gold fell 1.8 per cent to a six-month low of $1,085 under pressure from the rampant dollar - dropping below the $1,090 mark for the second session in a row, but still well above its $1,040 recent trading low. "The gold market has very much been hostage to developments relating to Europe's sovereign debt crisis," said Jeffrey Nichols, senior economic advisor at Rosland Capital. "But so far, gold seems to be holding up well despite the strengthening dollar."

"Essentially, this would not trigger significant damage," said seismology institute Director Renato Solidum. He said the quake was centered off Lubang Island in Mindoro Occidental province, about 80 miles (130 kilometers) southwest of Manila, six miles (10 kilometers) under the seabed. The US Geological Survey put the magnitude at 6.1 and depth at 21 miles (33 kilometers).

The Philippine archipelago lies in the so-called Pacific Ring of Fire where earthquakes are common. It is flanked by the Pacific Ocean to the east and the South China Sea to the west with undersea trenches - potential quake triggers - running alongside its coast on both sides.

Today, civil servants ranging from 999 call operators to driving test examiners will form a picket line outside Parliament in a strike designed specifically to embarrass Labour on Budget Day. Rail workers are expected to stage the first national rail strike since the 1980s over the Easter period, while teachers and university lecturers have threatened to disrupt education. The rising tide of industrial action comes against the backdrop of the strikes by British Airways cabin crew who belong to the giant Unite union. Their brethren at the GMB union were responsible for the latest ballot of gas workers.

In the wake of the vote, Conservative chairman Eric Pickles slammed the stranglehold of both unions over the Labour party's finances.

He said: 'We are facing a spring of discontent as yet another union flexes its muscles. 'We need a strong government to stand up for the interests of this country, not one that's reliant on union barons propping them up. If the Prime Minister has any grain of moral authority left, he will show some backbone and condemn this walkout.' Since Gordon Brown became Prime Minister in June 2007, GMB has given 3.45 million pounds to Labour, equal to 7.7 per cent of the party's funding. Unite has handed 11 million pounds in recent years to Labour.

Millions of passengers are facing travel chaos at Easter after rail workers voted last week for the first national train strike in 16 years.

The plot is revealed in a series of astonishing emails from Graham Stevenson, a senior Unite official who is also on the executive of the British Communist Party. Crucially, they show Unite is taking 'strategic' direction from the communists on both the BA strike and the overthrow of New Labour. One email proclaims: 'The Labour Party is simply broke. As millionaires desert, it has been forced to go back to the unions for funding. We will have a huge number of MPs who are members [of Unite].'

'In the past unions had large parliamentary groups but few MPs actually bothered to take account of our policies. This will change!'

Since Gordon Brown became leader, Unite has given Labour 11 million pounds - 25 per cent of its income - and saved it from bankruptcy. Unite is funding 148 Labour seats at the General election at a cost of 460,000 pounds. Thirteen members of the Cabinet - half of the total and including Mr Brown - have received a total of 33,000 pounds from the union. Some 167 Labour MPs and candidates are members of Unite, prompting accusations from the Tories that Mr Brown is in danger of relinquishing power to a 'militant tendency'.

As national organiser of the transport section of Unite, Mr Stevenson is a central figure in the union, alongside the equally Left-wing assistant general secretary Len McCluskey who is personally co-ordinating the BA strikes. The Stevenson emails, sent over the past 12 days to London-based political historian Pavel Stroilov who is writing a book about Labour's links with Communism, show that after the next election Unite plans to exert 'vigorous control' over its sponsored MPs.

The extraordinary correspondence began on March 12 with a routine question from Mr Stroilov to Mr Stevenson about his personal website, which gives a history of the Communist Party in this country. Mr Stroilov asked: 'How is the class struggle going? Observing it from some distance, it looks like the spectre of Communism is rising again in the British Labour Movement, isn't it?' This unleashed a flurry of emails from the Unite official, who wrote: 'Yes, things are very busy - the struggle goes on! And yes, the [Communist] Party is very much in the thick of a great deal.'

At issue is Israel's announcement two weeks ago, as Vice President Joe Biden visited, that it will build 1,600 new apartments in east Jerusalem, the largely Arab section of the disputed holy city. Palestinians claim east Jerusalem as the capital of a future state and have delayed new US-sponsored peace talks over what they say is an Israeli land grab.

Obama and Netanyahu initially conferred for about 90 minutes in the Oval Office - a half-hour longer than scheduled. After that meeting, Obama retired to the residence while Netanyahu stayed behind in the White House to consult with his staff in the Roosevelt Room, a White House official said late Tuesday. Netanyahu then asked for a second meeting with Obama, who came back downstairs to the Oval Office for another 35 minutes of talks with the prime minister, said the official who spoke on condition of anonymity, to discuss the sensitive diplomatic issue.

Although they met for a total of two hours, the White House did not issue a formal statement on what was discussed in either meeting, another break with custom. Israeli officials also had no comment.

Duane and Assemblyman Richard Gottfried (Democrat for Manhattan) are behind the plan to make it legal for folks with serious medical woes to score limited amounts of weed from state-certified distributors - or grow it themselves. The Senate still needs to approve the provision, though Democrats included revenue projections from the sale of medical marijuana in their 2010-2011 budget proposal. "It's ludicrous," needled Senator Martin Golden (Republican for Brooklyn).

Golden and other Republicans said the Democrats' budget proposal is laden with one-time-only gimmicks, including raising $700 million through the refinancing of tobacco bonds first issued in 2003. The $136.2 billion plan contains most of the spending cuts proposed by Governor Paterson, but rejects new taxes on cigarettes and sugary sodas. Paterson was pleased the Senate accepted his cuts, but worried their revenues were unrealistic. "One of the things we're going to have to avoid in this process is creating revenues that aren't real," Paterson said.

Judge Kevin Dougherty was no pushover as he told one 15-year-old that for every lie the boy told, he would get a year in juvenile detention. By the end, the teen got three years in the system, reports the Inquirer. "You all want to play me and say you went down there shopping," Dougherty told the group of teens, according to the Inquirer. "I'm not believing you."

Dougherty gave the others lesser sentences Monday, which ranged from 30 days in boot camp, to home detention, to time in state juvenile detention centers, in connection with the flash mob of mostly teens that descended on the City Hall area on February 16. Police say teens are using social network sites to spread word of massive gatherings. The latest happened Saturday on South Street.

"The lesson these kids are going to learn today is ... the days of being slapped on the wrist are over," Dougherty said.

A 12-year-old girl was charged shortly after the Friday night attack in southwest Philadelphia. The victim was surrounded by children, then punched and hit with sticks, police said. She suffered minor injuries to her knee and head and delayed seeking medical attention to help police with the investigation. Police also plan to charge the boy in an attack on a 73-year-old man who was beaten and robbed in the same area on March 13, Walker said. The victim in that assault, Vincent Poppa, suffered a heart attack and remains hospitalized.

Investigators believe the assaults are part of a game called "Catch and Wreck," which children in the neighborhood described to them after Friday's attack. Children told police the game involves pinpointing passers-by they think are homeless and then beating and robbing them for fun, Walker said. The woman who was attacked, however, said she is not homeless. "We're just hoping it's isolated and that (these arrests) will quickly bring it to a halt," he said.

The Aipac, a powerful lobby group, recently rebuked the Obama administration for its criticism of Israel over the proposed expansion of a Jewish settlement in occupied East Jerusalem. But Mrs Clinton argued that Washington's concern for Israel's ultimate security had led to the clash with Mr Netanyahu. In remarks that earned her one of several standing ovations from an audience of 7,500, she said: "Our commitment to Israel's security and Israel's future is rock solid, unwavering, enduring and forever."

But she received a more guarded response when she outlined the administration's reasoning behind its push for a peace agreement between Israel and the Palestinians. "The conflict with the Palestinians and with Israel's Arab neighbours ... threatens Israel's long-term future as a secure and democratic Jewish state," she said.

Mrs Clinton referred to the "belief among many" that better security and fewer suicide bombings in Israel meant "the status quo can be sustained". But "the dynamics of demography, ideology, and technology make this impossible". The ever-evolving technology of war was making it harder to guarantee Israel's security, she added. "For six decades Israelis have guarded their borders vigilantly. But advances in rocket technology mean that Israeli families are now at risk far from those borders."

The U-turn on the controversial environmental tax come two days after the governing UMP party of President Nicolas Sarkozy suffered a heavy defeat in regional elections. Senior UMP politicians have blamed the defeat in part on the proposed tax, which was due to come into effect on July.

Francois Fillon, prime minister, told a meeting of centre-right parliamentarians that France would not penalise its industry by introducing the tax unilaterally. "All decisions taken on the issue of sustainable development must be analysed in the light of our competitiveness," Mr Fillon told the deputies. "We want the decisions to be taken in common with other European countries otherwise we are going to see a growing shortfall in our competitiveness."

Since an EU-wide carbon tax is unlikely to gain approval in months ahead, if at all - the Swedish government pushed the idea with little success during its EU presidency last year - the French levy has, in effect, been shelved.

Rotarix, made by GlaxoSmithKline, was approved by the FDA in 2008. The contaminant material is DNA from porcine circovirus 1, a virus from pigs that is not known to cause disease in humans or animals, Hamburg said. About 1 million children in the United States and about 30 million worldwide have gotten Rotarix vaccine, she said.

The FDA learned about the contamination after an academic research team using a novel technique to look for viruses in a range of vaccines found the material in GlaxoSmithKline's product and told the company, Hamburg said. The drug maker confirmed its presence in both the cell bank and the seed from which the vaccine is derived, suggesting its presence from the early stages of vaccine development, she said. The FDA then confirmed the drug maker's findings.

GlaxoSmithKline emphasized Monday that the pig virus is not known to cause illness in humans, saying "it is found in everyday meat products and is frequently eaten with no resulting disease or illness." A similar virus, porcine circovirus 2, also does not cause disease in humans, but it does cause disease in its pig host, Hamburg said.

Legislation for England and Wales, which also covers other places of worship, is part of the Equality Bill. Supporters say ministers would not have to act against their conscience. Lord Carey's letter was prompted by Labour peer Lord Alli's amendment to the bill to allow civil partnerships on religious premises. The legislation had its third reading in the House of Lords on Tuesday and it will now go back to the Commons for final approval.

In his letter, Lord Carey says: "How long will it be before church ministers are threatened with legal proceedings if they perform marriages between a man and a woman, but not civil partnerships?"

Lord Carey's intervention is not the first time he has spoken on the subject of civil partnerships. This time, he is being supported by groups such as Christian Concern for our Nation, which on Tuesday handed in a 6,000 protest petition to the Equalities minister Harriet Harman. It calls on the government to vote down the amendment because it threatens religious freedom.

BBC Middle East editor Jeremy Bowen said the person to be expelled is likely to be the London head of Israel's secret service, Mossad. Diplomatic sources stressed the British government has stopped short of accusing Israel of the murder. However Mr Miliband had demanded that Israel co-operate fully with the investigation into how the passports were obtained. The foreign secretary is to make the statement after Britain's Serious Organised Crime Agency found proof of the cloned passports.

The BBC's Jeremy Bowen said the expulsion would send a "very clear message" of British disapproval. "It is a very big step for a government like the British to expel one of the diplomats belonging to one of its important allies," he said.

This might well be one of those bumps in the road that have dogged British-Israeli relations for decades, going back even beyond the founding of the State of Israel in 1948. It has rarely been an easy relationship and has been marked by contradictions, resentment and touchiness on both sides.

The Europeans try to balance their support for Israel as a state with their sympathy for the Palestinians as a people. They also have to be mindful of their relationship with the Arab world as a whole.