LISBON: Portugal’s Prime Minister Pedro Passos Coelho patched up his ruling coalition yesterday to save it from collapse, but financial jitters revived as the nation’s president warned of grave risks ahead.

Investors fear the crisis could unleash a new wave of instability in the euro zone’s debt-laden periphery, where anti-austerity sentiment is growing with no end in sight to high unemployment and recession.

Bond markets rallied in mid-afternoon trade a day after the prime minister said he had found a “formula” to hold together the shaky coalition, led by his Social Democratic Party.

But major credit rater Standard and Poor’s lowered the outlook on Portugal to negative from stable, indicating the country was liable to have its mid-range BB/B sovereign credit score downgraded.

The Lisbon stock exchange’s key PSI-20 index meanwhile closed 0.45 percent lower yesterday, giving up earlier gains prompted by signs of an emerging political fix.

President Anibal Cavaco Silva said the recession-struck country may find itself unable to raise money on bond markets when its 78-billion-euro ($100-billion) bailout program expires next year.