LISBON (Reuters) - Portugal's Left Bloc has concluded talks with the moderate Socialists for the creation of an alternative government that could oust the new center-right administration, but they still need the Communists for a parliament majority.
The far left party said on Friday its highest body approved a document agreed during the talks with the center-left Socialists and "on Bloc's behalf, the negotiations are concluded and the conditions are in place for a left-wing agreement to protect jobs, salaries and pensions".
Prime Minister Pedro Passos Coelho's austerity-minded government was sworn in last week after his coalition won the most votes in an election Oct. 4, but lost its majority in parliament, which swung to the left.
The Socialists warned earlier this week time was running out to reach an agreement for a majority-backed, leftist government, which they have pledged to have in place before trying to oust the new cabinet next week. If parliament rejects the government's program in next week's vote, the administration will fall.
The talks that began soon after the election have raised fears over the prospects for Portugal's timid economic recovery, because of the instability and the fact that the potential partners reject some reforms imposed to escape a debt crisis.
A group of over 100 entrepreneurs representing firms from cork-makers to motorways and construction, signed a manifesto arguing that uncertainty was already compromising investment, balance sheets and jobs, while a leftist government would only exacerbate the situation due to the far left's opposition to private business.
The center-left Socialists have argued that they can form a government backed by a leftist majority that would respect European budget rules.
But the far left, especially the Communists, reject Brussels-imposed budget limits and have various other significant ideological divergences making a binding deal between them hard to achieve. Some Socialists also favor a centrist coalition rather than a deal with the radical left.
The Socialists plan more talks with the Communists before next week's vote to see if they can bring them on board.
The government agreed a legislative program on Thursday, which parliament will debate on Monday before a vote on Tuesday or Wednesday. The Socialist have said they would not vote it down without a viable left-wing grouping in place.
The government said it was "permanently ready to compromise with the Socialists" to secure their support and ensure the governability of the country.
(Reporting By Andrei Khalip, editing by Axel Bugge)