Cavaco Silva won around 55 percent of the vote, compared with about 19 percent for Manuel Alegre of the ruling Socialists, his closest competitor, in a victory widely seen as bolstering efforts to overcome the euro zone debt crisis.

Cavaco Silva, of the centre-right Social Democrats, has been a key ally of the minority government of Socialist Prime Minister Jose Socrates' drive to cut the budget deficit through tough austerity measures.

"I will be a reference of confidence, stability and solidarity, without abdicating the powers that the constitution gives me," Cavaco Silva told supporters after the vote. "

Cavaco Silva, a former economics professor who was prime minister from 1985 to 1995, cast his vote in a chilly Lisbon.

"The Portuguese voted for no change, for continuity and for political stability," Socrates told reporters, promising that his government would work to uphold "institutional cooperation."

The president's post is largely ceremonial but he does have the power to dismiss the prime minister and dissolve parliament.

Should Portugal have to follow euro zone weaklings Greece and Ireland and go the European Union and International Monetary Fund for a rescue package, Cavaco could be under pressure from his own party, which is in opposition to the Socialists, to do so.

"This is a time of crisis, with a minority government, in which stability is valued by voters," said Antonio Vitorino, a Socialist and former European commissioner. "The president has to be a beacon of stability."

Portugal's economic plight was a big issue in the campaign but election fever was low in this country of 10.5 million people on the edge of the Atlantic Ocean.

Many Portuguese are disillusioned because of pay cuts, higher taxes and rising unemployment, and turnout was only about 50 percent.

"Nothing is going to change," said lawyer Miguel Vila de Brito, 47, before he voted. "There will be hope when there will be new general elections."

Portugal's economic problems have been compounded by sluggish growth and stringent labor laws that weaken business competitiveness.

Unlike Greece, however, there has been no violent unrest in the streets. Unlike Ireland, where the economic crisis has led to a political near-collapse, its banks have not been exposed to toxic assets or property bubbles.

The interest rate the country pays on its bonds have fallen in the past two weeks as the country had two successful debt auctions in January.

But investors have steadily sold Portuguese bonds in the past year as the euro zone debt crisis deepened, with the rate on its 10-year bonds currently at 6.81 percent, sharply above levels around 4 percent this time last year.

That fact that the Socialists rule without a majority in parliament has added to investor concerns in the past year.

If those concerns return, pressuring Portugal again, Cavaco could play an increasingly important role — especially if Lisbon is pushed to carry out further economic reforms or deepen austerity measures. One potential flash point will be next year's budget, which will be presented in October.

"Presidents tend to be a bit more interventionist in their second terms, the bottom line is that they have nothing to lose," political commentator Jose Miguel Judice said.

"Cavaco Silva is by nature a cautious man. He won't take any initiative against the government unless there is a crisis."

Socrates won backing from the Social Democrats for this year's budget, which cut civil servants' wages by 5 percent and introduced tax hikes, partly through Cavaco Silva nudging his own party to provide support.

The government has promised Brussels it will cut its budget deficit to 4.6 percent of gross domestic product this year from 7.3 percent last year. Many economists expect that to tip the country back into recession after 1.3 percent growth in 2010.