Portugal's Socialists win local elections in boost for PM Costa

LISBON (Reuters) - Portugal's ruling Socialists emerged as the winners in Sunday's local elections, raising their national share of the vote in a strong endorsement of Prime Minister Antonio Costa. The Socialists grabbed the most town halls in their history in a triumph for Costa, who grabbed power two years ago together with the hard left Communists and Left Bloc and has delivered an increasingly robust economy after Portugal's 2011-14 debt crisis. Many of the austerity policies of the previous government have been turned around, mainly by reversing tax hikes for lower salaries to give the Portuguese more disposable income. The Socialists have also continued to reduce the budget deficit through tight public spending. They won 39 percent of the national vote, up from 32.4 percent at the national election in 2015. The Social Democrats obtained 28 percent of the vote on Sunday. "The Socialist Party has had the best result in its history," Costa told supporters on Sunday night. The Socialists won 158 town halls. The Social Democrats, who ran together with their rightist CDS-PP allies in some town halls, won around 100. The Socialists formed a governing alliance in 2015 with the Communists and Left Bloc, breaking with Portuguese political tradition to use their combined parliamentary majority to oust the Social Democrats who won the most votes at the election. Analysts warned at the time that the government could be unstable because of policy differences with the two left-wing parties. But Sunday's national result showed both the Communists and Left Bloc losing votes, putting the Socialists close to obtaining a majority without those parties. The poor showing for the Social Democrats could lead former prime minister Pedro Passos Coelho to step down from his party's leadership. He said he would "carefully reflect" whether to stand as a candidate for party leader early next year. (Reporting by Axel Bugge, editing by Ed Osmond)