Portuguese bond yields soar to nearly 8% Portuguese borrowing costs jumped to a seven-month high on Friday as the opposition socialist party further stoked political tensions by demanding a renegotiation of the country's bailout terms. Yields on the country's 10-year bond leapt 53 basis points to 7.27 per cent in thin trading, hitting an intraday high of 7.9 per cent, after a 10bp rise in the previous session. Borrowing costs are up from 5.15 per cent in May, and are at their highest point since December last year. The markets had already been spooked on Thursday after President Aníbal Cavaco Silva called for a "national salvation" agreement between the ruling coalition and the main opposition party, leading to early elections in June 2014. His proposal raised concerns that an early election immediately after Portugal's three-year bailout agreement is to due to end would weaken the commitment of political parties to the tough reforms required under the programme. These fresh uncertainties came just a week after another government crisis the week before triggered by the resignation of two senior ministers. "Investors have become increasingly nervous about the political situation," said Paolo Batori, strategist at Morgan Stanley. We turned cautious on Portugal last week and advised clients to reduce their exposures on market strength. Before there was 100 per cent commitment to implement the Troika programme. Now investors are questioning that key political anchor. The increase in bond yields hit share prices that had only just recovered after last week's political turmoil. Lisbon's PSI 20 share price index fell 0.7 per cent after a 2 per cent fall in the previous session. Spain's Ibex 35 index was down 2.4 per cent. The political turmoil has also forced Lisbon to request a delay in the eighth review of the bailout by its creditors, initially due to start on Monday.