Portugal’s PM Pedro Passos Coelho repaired his ruling coalition Friday to avoid a tremendously disastrous collapse in a row over austerity measures for the bailed-out nation.

Portugal's PM Pedro Passos Coelho repaired his ruling coalition Friday to avoid a tremendously disastrous collapse in a row over austerity measures for the bailed-out nation.

"I found a formula to hold together the shaky coalition, led by his Social Democratic Party," Coelho announced.

 A number of Portuguese ministers resigned over the crisis, leaving their prime minister obliged to find a formula that assures stability of his government.

The direct outcome of Portugal's PM statement was that the bond markets surged. The Lisbon stock index eased after surging 3.7 percent the previous day on signs of an emerging political fix.

The bonds had dramatically fallen at the height of the political crisis mid-week.

Investors feared a new wave of economic instability in Portugal as public opinion started to oppose the austerity policies in addition to the indications of the unemployment and recession.

Portugal's President Anibal Cavaco Silva has not commented on the crisis yet as he is subject to the opposition pressures to dissolve the parliament and to call for snap elections.

The austerity measures have raised the rates of unemployment and recession, and the government expected its economy to contract by 2.3 percent by the end of the year.

Portugal is also under pressure to present a further 4.7 million Euros in spending cuts to the European troika when its auditors visit Portugal on July 15.