* Socialist opposition claims 150 mayorships, Communists
* Ruling party elects 105 mayors, gets just 26.5 pct of vote
* PM admits defeat, but vows to stick to bailout goals
By Andrei Khalip
LISBON, Sept 30 Portugal's ruling Social
Democrats took a heavy beating in local elections on Sunday as
voters passed their verdict on the austerity measures that
accompanied the 2011 international bailout.
While it does not directly impact the government, the poor
election result could weaken its resolve for further budget cuts
demanded by foreign lenders and should embolden the opposition's
anti-austerity stance during a review visit by European Union
and IMF officials.
With 99 percent of the ballot counted on Monday, preliminary
results of the election, for 308 municipal mayors and thousands
of smaller councils, showed the votes boosting the main
opposition Socialists. They grabbed 36.4 percent of the vote
while the Social Democrats (PSD) won 26.5 percent.
Independent candidates also advanced, winning the
second-largest city of Porto and its industrial satellite city
of Matosinhos, a traditional Socialist bastion.
Prime Minister Pedro Passos Coelho acknowledged that the
centre-right government was taking a hit for its austerity
measures, which have contributed to Portugal's worst economic
crisis since the 1970s, with two-and-a-half years of recession
and record unemployment.
"We know there's always a price to pay in politics," said
His priority is to press ahead to exit the bailout as
planned in mid-2014, he said.
"But we also know that this path will give us the chance to
end our bailout programme and recover our opportunity to grow
and give more social justice and prosperity for all," he said.
Antonio Costa Pinto, a political scientist in Lisbon, did
not expect any immediate consequences for government plans and
its relationship with the lenders, but said the ruling party may
lose some of its appetite for more austerity down the road.
"There's likely to be some bad blood within the PSD and that
may complicate things for the premier," he said. "But in the
next week or so, it's just the troika calling the shots with
their review and the government will just have to abide."
Portugal's benchmark 10-year bond yields were little changed
at 6.91 percent after Friday's 6.89 percent. Last week they
slipped below the 7 percent level, seen as prohibitively high.
Lisbon told Brussels on Monday it was on course to meeting
this year's budget gap goal of 5.5 percent, but analysts warn
2014's 4 percent target is far more challenging.
With 10 of the 308 results still to be declared, the
Socialists were up 11 at 143 mayors elected, and the party
claimed it won a total of 150.
The PSD won 105, down from 137. The PSD's worst previous
record was a haul of 114 mayors in 1989, although recent merging
of some local council makes a direct comparison difficult.
Still, the PSD's coalition partner, the rightist CDS, had
five mayors elected in a major improvement from one in 2009. The
Communist-Greens alliance had 33, up five. Twelve independents
were elected, up from seven, after a record 80 candidates stood.
Socialist leader Antonio Jose Seguro said the results showed
"an enormous will for change" among the Portuguese, while
analysts put it down to voter fatigue with the waves of spending
cuts and the biggest tax hikes in living memory.
Passos Coelho, whose government nearly collapsed in July
over a dispute about austerity, said he would continue policies
to complete the bailout plan as scheduled in mid-2014. The
government insists it will not need a second rescue package
although many economists say it well might.
The government has promised spending cuts of more than 4
billion euros by the end of 2014 in order to meet its budget
deficit goals, but has been facing growing resistance at home
from business groups, unions and the opposition, which want it
to negotiate a new easing of the targets.
A general election is not due until 2015 and the government
has a solid majority in parliament to pass bills, although its
austerity plans have been increasingly running into problems at
the Constitutional Court that has shot down some of its reforms.