Armenio Carlos, the new Communist leader of CGTP, the country's largest union, wants its 700,000 members to send a signal to the centre-right government that the country will no longer tolerate the erosion of workers' rights, lower salaries and record high unemployment.

The union could not say how many of its members had responded to the strike call, but said the country's railway transport was crippled, including the international Lisbon-Madrid route. Lisbon's underground was shut at midnight. Many hospitals were only accepting emergencies.

It also said rubbish collectors, ports and some schools had shut down across the country.

There was little evidence of participation in the private sector, however, with Portugal's biggest exporter, Volkswagen's (VOWG_p.DE) AutoEuropa plant, still turning out cars.

Flag carrier airline TAP was flying, and Lisbon airport functioning as normal.

Many struggled into work, unconvinced by the call to strike and reluctant to lose money in support of it.

"They go on strike and hurt us," said Ana Maria Verissimo, 53, a cleaning lady, as she waited for one of the few buses still running in Lisbon. "This won't resolve anything. They'll have to find another way. If I go on strike, my pay cheque will be lower at the end of the month."

There was unusually heavy traffic around Lisbon as many were forced to take their cars to get to work.

In the central town of Coimbra there were a few buses on the streets, but the central train station was shut down. Shops were open there, as they were in Lisbon.

"I wanted to go to work just outside Coimbra but had no transportation to get there, so I was forced to stay back and am not too happy about it," said Manuel Duarte, 47, a social worker.

"I don't blame Europe or Germany for this crisis; they came here, lent us money and need to get something in return. Our problem was our elites, who ate all the money ... And now, as always, the poorer fellows are left to pay the bill."

The government said it would not provide any figures on participation until the strike is over.

SECOND BAILOUT?

The Portuguese have so far shown little inclination for the kind of frequent and violent protests seen in Greece. The 520,000-strong UGT, Portugal's second-largest union, did not join Thursday's strike and has signed up to labour market reforms required by the European Union and IMF in return for the bailout.

The country, facing its worst recession since the 1970s, was forced to take a bailout in May last year after running up large debts. Some economists say it might need a second bailout as the recession deepens, putting its budget targets in doubt and jeopardising its planned return to the bond markets late next year.

Portugal is western Europe's poorest country and followed Greece and Ireland in seeking a bailout to handle their crippling debts. Spain and Italy are also now facing austerity measures, and Italy's largest trade union is planning a general strike over labour market reforms.

Portugal's UGT, which is allied to the opposition Socialist Party, has urged opponents of austerity to show restraint, warning that Portugal could descend into the kind of chaos seen in Greece.

The strikers say the new labour laws, which make it easier to hire and fire staff and which cut compensation for workers, mark the biggest step backwards for workers since Portugal's return to democracy in 1974 after military rule.

The strike "will be a sort of a test for the new union leadership", said Jose Adelino Maltez, a political scientist at Lisbon Technical University.

"They will try to show that they can go beyond the usual stoppages in the public service and transport, that the movement is broader than its Communist supporters."

COSTLY KISS

Posters urging workers to join the strike have sprung up around Lisbon, and big protest marches are planned for Thursday afternoon.

"This kiss leaves us penniless," read one mural in the port area, showing Prime Minister Pedro Passos Coelho kissing German Chancellor Angela Merkel's backside, and urging workers to strike.

Germany, the biggest contributor to euro zone bailouts, has drawn resentment in some bailed-out nations for its insistence on budgetary discipline, with anti-German protests in Athens, but that sentiment appeared to have less traction in Portugal.

Luis Antonio, 35, said he was joining the strike because his boss wanted it, but he does not blame Germany for Portugal's hardship.

"My boss wants us to strike, so I will go for that," said Antonio, a plumber, adding that his wife and sister-in-law had lost their jobs in the crisis. "The fault of this is those who govern us, not Germany."

This year's harsh economic downturn has pushed unemployment above 14 percent, and the government expects the economy to contract by 3.3 percent.

Portugal's core deficit tripled in the first two months of 2012, showing that the slump is denting tax revenues and stoking concerns that the country could miss its budgetary targets.

But the centre-right government still commands strong support, despite promising tough times ahead when it came to power last year, suggesting many Portuguese believe that the austerity measures will eventually lead to recovery.

(Additional Reporting By Andrei Khalip and Daniel Alvarenga)

• A Permanent Economic Emergency