UPDATE 1-Portugal scraps golden shares in utilities

* Golden shares gave special rights to state

* Part of bailout deal

* Govt also to speed up spending cuts

(Updates with quotes, adds

LISBON, July 5 (Reuters) - Portugal’s new government said on Tuesday it was abolishing so-called golden shares held by the state in companies such as Galp Energia , EDP and Portugal Telecom , in line with EU demands.

The golden share gives the state special rights, such as the right to veto strategic decisions by the company.

Finance Minister Vitor Gaspar told a news briefing after a cabinet meeting the government decided to eliminate any special rights that give the state preference over other shareholders.

The European Commission has long insisted that such special rights be scrapped, and the measure, which is designed to promote competition, is among Portugal’s obligations under its 78-billion euro ($111 billion) bailout deal.

Last year, Portugal used its golden share to block the sale of Portugal Telecom’s stake in Brazil’s top mobile telecoms firm Vivo to Spanish peer Telefonica . It later approved a revised deal.

The government will still consider what to do with the actual shares held by the state in most of these companies. It has said earlier it plans to sell its stake in power utility EDP in the third quarter.

Gaspar also said the new centre-right government would speed up the process of cutting spending, reaffirming the administration’s commitment to meeting the fiscal goals included in the country’s EU/IMF bailout pact.

“The emphasis of this government to consolidate the budget is on containing spending, and to meet that objective in the short- and medium-term we have to accelerate the process, and the government will act with the necessary urgency,” he said.

The government also said it would proceed with reforms in the public sector aimed at merging some public services and eliminating others as part of its austerity drive. (Reporting by Sergio Goncalves and Daniel Alvarenga, writing by Andrei Khalip; Editing by Will Waterman) ($1 = 0.705 Euros)