Portugal’s bonds cut to junk status

As in Greece, though, the government’s tough medicine, which is required by international creditors in return for the $104 billion in bailout money, is unpopular. The strike had a huge turnout, making it possibly the biggest walkout in 20 years.

Police detained three demonstrators who scuffled with police outside Parliament after a protest march, Associated Press Television News reported.

“They are trying to destroy the national health service, and salaries haven’t gone up since 2004,’’ striking Dr. Pilar Vicente told the agency.

International ratings agency Fitch blamed Portugal’s “large fiscal imbalances, high indebtedness across all sectors, and adverse macroeconomic outlook’’ for its decision to cut the country’s rating by one notch to BB+. Rival Moody’s already rates Portuguese bonds as junk, but Standard & Poor’s rates them one notch above.

Fitch’s decision to cut Portugal to a noninvestment grade will likely mean it’s even more difficult for the country, which is already mired in a deep recession and is witnessing rising levels of unemployment, to return to bond markets by its 2013 goal. That raises the prospect that Portugal, like Greece, may need a second bailout.

“Portugal’s downgrade goes to show how hard it will be for troubled economies to pull themselves out of the crisis and how long this will take,’’ said Sony Kapoor, managing director of Re-Define, an economic think tank. “The Portuguese downgrade highlights the limits of austerity policies both domestically in Portugal and in the wider euro area.’’

The 24-hour walkout came as Portugal, one of Western Europe’s smallest, frailest economies, endures increasing hardship as it tries to get its borrowing down.