Portugal has hosted Chancellor Angela Merkel of Germany at a fortress in Lisbon as protestors angered by eurozone austerities draped city statues in black. Mrs Merkel praised Portugal's implementation of a 2011 bailout.
Deutsche Welle reports that during talks with Prime Minister Pedro Passos Coelho on Monday, Mrs Merkel said she sensed "great determination to master this difficult phase".
For Portugal's population the times were hard, Mrs Merkel said. Demonstrations prompted by her trip "belong to democracy but this should not dissuade politicians from doing what's necessary," she said.
"The programme is being fulfilled by Portugal in an excellent way," she said.
Civic and trade union groups earlier urged people to wear black clothes at workplaces, schools and in public. Numerous statues in Lisbon were also wrapped in black.
Outside the coastal fortress, six kilometers from Lisbon's inner city, where the talks took place, several hundred demonstrators chanted "Merkel, no!" and "Out of here!"
Mr Coelho admitted that Portugal's "social and political climate" had deteriorated, but said Portugal was on course to end its savings drive by 2014 and return to the open finance market to seek loans.
Deutsche Welle reports he rejected accusations that Mrs Merkel was partly responsible for Portugal's crisis.
This assertion had "little broad support," Mr Coelho said. "It is important for us and Europe that the consolidation program functions."
In 2011 Portugal obtained a bailout of 78 billion euros ($US100 billion) from the European Union, European Central Bank and International Monetary Fund by pledging to slash its budget deficit to 3% of Gross Domestic Product by 2014.
Mrs Merkel described the actions of the government as brave, adding that Portugal's chances of returning to growth had improved very much.
She offered German help to develop Portugal's vocational training system for its unemployed youth.
percent, according to official statistics, Portugal's economy has shrunk 3% and unemployment has reached a record 15.9% this year.
Steps enacted by the government have included labour market reforms, state company privatizations, sharply cut spending and massively raised taxes.
"We have an elementary interest that all countries of Europe do well," Mrs Merkel said, adding that it was Germany's task to boost its consumption of European produce and to help enhance inner-European economic cooperation.
"Countries that still have scope must try to foster their domestic consumption for imports from Spain and Portugal," she said.
She also said that Monday's talks in Lisbon had included the possibility that the European Investment Bank assist small and medium-sized Portuguese firms.
At a parallel conference of Portuguese business leaders, Economy Minister Alvaro Santos Pereira said Portugal must boost exports in a sustainable manner.
