Portugal has announced hard-hitting austerity measures aimed at reducing the nation's deficit.
The two-year package involves raising income tax, cutting public spending and boosting the tax on goods sold to 21%.
Salaries of politicians and public sector chiefs will also be cut by 5%.
The measures are aimed at reducing Portugal's deficit to 4.6% of GDP by 2011.
In neighbouring Spain, austerity measures were announced on Wednesday including 5% reductions in civil service pay and job cuts, while Greece earlier announced similar measures.
European stocks rose on Thursday following the Spanish and Portuguese plans, which eased worries that Europe's debt crisis could spread.
