The Portuguese stock market witnessed on Wednesday a serious shock as the bonds’ and shares’ prices plummeted

The Portuguese stock market witnessed on Wednesday a serious shock as the bonds' and shares' prices plummeted, leading to a political instability after the cabinet missed the ministers of Finance Vitor Gaspar and Foreign Affairs Paulo Portas.

PM Pedro Passos Coelho announced on Tuesday that he rejected Portas' resignation and would continue to head the government to ensure political stability and work to overcome the crisis.

Without the CDS-PP rightist party which is led by Portas, the center-right government would lose its majority.

Investors reacted with the political instability caused by the resignation and with the public unrest due the austerity policy.

   
Portugal's PSI 20 stock index slumped 6 percent due to sharp losses of over 10 percent in banks' shares.

With no solution imminent, Portugal's bond prices slumped further.

The Portuguese crisis also relit tension on the euro zone bond market.

Rates for several countries rose but borrowing costs for Germany and France fell, widening the difference, or spread, between the best and worst performers on the euro zone market.

Germany considered that Portugal could stick to the reforms it had announced agreed with creditors to unlock bailout funds, although it will face a number of hardships.