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Junior party aims to save Portugal coalition gov't

Wednesday - 7/3/2013, 3:01pm  ET

Portugal's Prime Minister Pedro Passos Coelho addresses a statement to the nation at Sao Bento palace, the premier's official resident, in Lisbon, Tuesday, July 2, 2013. Passos Coelho said he won't resign as Prime Minister after Portugal's Foreign Minister Paulo Portas, the leader of the junior party in the bailed-out country's center-right coalition government, announced Tuesday he resigned over austerity policies designed to restore Portugal's fiscal health. Portas' announcement of his departure in a written statement came a day after Finance Minister Vitor Gaspar quit and left the government in danger of collapse. (AP Photo/Francisco Seco)

LISBON, Portugal (AP) -- A spokesman for the junior party in Portugal's coalition government says it will negotiate terms with its senior partner to stay in the administration, saving the government from immediate collapse.

Popular Party official Luis Queiro announced Wednesday that party leader Paulo Portas, who quit as foreign minister in protest against austerity policies, will hold talks as soon as possible with Prime Minister Pedro Passos Coelho.

The two remaining Popular Party members of the Cabinet will stay in their jobs, though Queiro warned his party will carefully examine future spending cuts.

The Popular Party's possible departure sent financial markets into a tailspin because without its votes the government couldn't be sure of passing legislation in Parliament.

Portugal has to enact cuts to keep accessing bailout loans and avoid bankruptcy.

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