Portugal PM resigns

Mr Guterres took responsibility for the defeat

Portuguese Prime Minister Antonio Guterres has tendered his resignation, after his centre-left Socialist Party suffered a crushing defeat in the municipal elections.

"I have tendered my resignation to the president of the republic," he told reporters as he left a 40-minute meeting at the presidential palace.

Social Democrats celebrated on the streets of Lisbon

Correspondents say the Socialists may put forward another candidate for the premiership.

If not, the president will dissolve parliament and call elections within 60 days.

The Socialists were re-elected for a four-year term in October 1999, when they won exactly half the seats in the 230-member parliament.

Their main rivals, the Social Democrats, headed by former Foreign Minister Jose Manuel Durao Barroso, won local elections on Sunday in most of Portugal's biggest cities, including the capital Lisbon, the northern industrial city of Porto and the Lisbon suburb of Sintra.

'Signal for change'

Mr Guterres' Socialists won control of only 98 councils, compared to the Social Democrats' 144.

Mr Barroso said his party was ready to provide an alternative

The party has been punished for poor economic management and has recently had to make embarrassing climb-downs over several high-profile issues, including an unpopular law on drink-driving.

Mr Guterres has also reshuffled his cabinet a number of times since his re-election in 1999 and his ratings have not been helped by allegations of corruption among Socialist Party members.

He said his resignation was necessary to re-establish trust between the goverment and the voters.

The BBC correspondent says the man best placed to succeed Mr Guterres as Socialist Party leader is Jorge Coelho, a former infrastructure minister who is number two in the party.

Supporters of the opposition Social Democratic Party took to the streets in celebration at their better than expected results.

Our country voted for change and voted on the future

Opposition leader Jose Manuel Durao Barroso

The party has lacked unity since it failed to oust the Socialists at the last general election, but after Sunday's results Mr Barroso said it was in a position to offer Portugal an alternative government.

"Our country voted for change and voted on the future," he said.

"I asked the country to send a signal for change and this signal was sent."