Portugal's PM resigns after trouncing in polls

Portugal faces snap elections in the New Year after the surprise resignation of Antonio Guterres, the Socialist Prime Minister, in response to his party's catastrophic losses in Sunday's municipal polls.

"This defeat is my defeat. I quit," Mr Guterres said early yesterday when the extent of the rout became known. He said it was "necessary to re-establish the trust between rulers and ruled".

Jose Manuel Durao Barroso, who leads the conservative Social Democratic Party (PSD), hailed its first big win in 10 years. "The country has voted for change. It knows that the PSD is an alternative," he said.

After six years in power at the national, regional and municipal levels, the Socialists lost their urban vote, their youth vote and – for the first time since the 1974 Carnation Revolution – their Lisbon heartland. The capital's Mayor, Joao Soares, was narrowly defeated by Pedro Santana of the PSD.

The flamboyant Socialist Mayor of Oporto, Fernando Gomes, was trounced, against expectation. Towns such as Sintra, Coimbra, Cascais and even the working-class town of Setubal fell to the PSD.

Mr Guterres's ratings had plummeted as the economy sagged and urgent social reform ground to a halt.

President Joao Sampaio was expected to accept Mr Guterres's resignation. He could invite Socialist MPs to elect a new prime minister but, instead, is widely expected to call elections for February or March.