President of crisis-hit Portugal re-elected

LISBON (Reuters) - Portuguese President Anibal Cavaco Silva won a second term in an election Sunday, television exit polls showed, a result that should ensure short-term political stability as the government fights to avoid an international financial bailout.

The country's leading television stations -- SIC, RTP and TVI -- put Cavaco Silva's share of the vote at around 55 percent compared with about 19 percent for Manuel Alegre of the ruling Socialists, his closest competitor in a field of six.

Alegre conceded defeat minutes later.

Cavaco Silva, of the centre-right Social Democrats, is expected to bolster Socialist Prime Minister Jose Socrates' drive to cut the budget deficit through tough austerity measures and pull the country out of a debt crisis.

The president's post is largely ceremonial but he does have the power to dismiss the prime minister and dissolve parliament.

Should Portugal have to follow euro zone weaklings Greece and Ireland and go the European Union and International Monetary Fund for a rescue package, Cavaco could be under pressure from his own party, which is in opposition to the Socialists, to do so.

But after casting his vote in a chilly Lisbon, Cavaco Silva, a former economics professor who was prime minister from 1985 to 1995, said he did not want to speculate about that possibility.

"I am a president in favour of stability. I consider that it is very important for Portugal to have political stability to solve its problems," he said.

Portugal's economic plight was a big issue in the campaign but election fever was low in this country of 10.5 million people on the edge of the Atlantic Ocean.

Many Portuguese are disillusioned because of pay cuts, higher taxes and rising unemployment, and turn-out was only about 50 percent.

"Nothing is going to change," said lawyer Miguel Vila de Brito, 47, before he voted. "There will be hope when there will be new general elections."

Among those choosing to stay away from the polling booths was construction worker Antonio Pinto, 48.

"I don't see much sense in voting....we have to think about how to get out of the crisis but this lies more with the government," he said, walking on Lisbon's Avenida da Liberdade.

PORTUGAL NOT ALL GREEK

Portugal's economic problems have been compounded by sluggish growth and stringent labour laws that weaken business competitiveness.

Unlike Greece, however, there has been no violent unrest in the streets. And unlike Ireland, where the economic crisis has led to a political near-collapse, its banks have not been exposed to toxic assets or property bubbles.

Political analyst Antonio Costa Pinto told Reuters that the Cavaco's victory would not in itself change anything, but the government needed stability to continue to respond to the international markets as the crisis went on.

Next year's budget, to be presented in October, will be a crucial factor, he said.

"One thing is certain, the president will have a significantly more important role in this next phase after the election than before it. Not just due to the crisis, but also because we have a minority government and the president has margin to manoeuver," Costa Pinto said.

Socrates won backing from the Social Democrats for this year's budget, which cut civil servants' wages by 5 percent and introduced tax hikes, partly through Cavaco Silva nudging his own party to provide support.

The government has promised Brussels to cut the budget deficit to 4.6 percent of gross domestic product this year from 7.3 percent last year. Many economists expect that to tip the country back into recession after 1.3 percent growth in 2010.