A general strike halted public transport and factories in many parts of Portugal on Thursday and thousands marched against austerity measures imposed as the price of an EU/IMF bailout.

The 78 billion-euro (67 billion pound) rescue fund is designed to keep Portugal afloat and help stem the euro zone's debt crisis, but the spending cuts have sent the country into its worst recession in decades.

Highlighting Portugal's economic woes, Fitch Ratings on Thursday cut its credit rating to junk.

Thousands of protesters marched in Lisbon, with many chanting: Spain, Greece, Ireland, Portugal, our struggle is international! referring to spending cuts across Europe. Let bankers pay! read banners.

They were protesting against job losses, tax hikes and pay cuts agreed between Portugal and the troika of lenders - the European Commission, European Central Bank and International Monetary Fund.

But there were big discrepancies between what unions said was a massive turnout for the strike and figures provided by the government, which showed just 10.5 percent of public sector workers had walked out.

Manuel Carvalho, head of the 750,000-strong CGTP union, refused to provide figures for the actual turnout, saying only this is a massive strike, without a doubt bigger than last year.

In a strike on the same day in 2010, the CGTP said three million people took part, in the nation of 11 million.

Joao Proenca, head of the UGT union, said government figures on the turnout were clear manipulation.

The Troika has failed in Greece, said Proenca. We hope that the government understands that the Troika can't govern here either.

Thousands of people, mainly young, protested in Lisbon and there were scuffles between a small group of demonstrators and police at the steps of parliament as they attempted to break through a police cordon.

The strike halted many planes and trains and shut some ports and schools.

International flights to and from Lisbon and Porto were cancelled for the duration of the 24-hour walkout, the website of airport authority ANA said. Lisbon airport was deserted.

NO CHRISTMAS CHEER

For weeks, posters lining the streets of Lisbon have urged workers to strike. The centre-right government insists there is no alternative to cuts. Portugal's previous government collapsed in March after failing to push its own austerity drive through parliament and had to request the bailout.

To cut the budget gap and debt, the new government has halved 2011 year-end bonuses for all workers and cancelled holiday and year-end bonuses for civil servants next year.

Its reforms include spending cuts in everything from health services to public television. It is reforming labour laws and has extended the working day by half an hour.

With what the troika is doing here, I think we have reasons for the strike. I've paid my social security since 1981, why am I going to be left without part of my Christmas bonus? I think it is wrong, said 45-year-old machinist Carlos Silva.

Portugal, the third country in the euro zone to seek a bailout after Greece and Ireland, is headed for its deepest recession since it returned to democracy in 1974. The economy is set to contract nearly 3 percent next year.

Prime Minister Pedro Passos Coelho, who came to power in June, said the priority was to beat the debt crisis.

It is up to me to try to mobilise the Portuguese for action every day to contribute to transform Portugal, he said.

STRONG SUPPORT

Despite the protests, an opinion poll by Marktest pollsters Thursday showed support for the ruling PSD party rising four percentage points from last month to 45 percent. The government's solid backing contrasts with Greece, where a national unity government was formed to push through measures to stave off bankruptcy.

Analysts point out that the Portuguese do not have a tradition of violent protest, and labour action in the face of the crisis has so far been low-key. But the prospect of tougher belt-tightening measures, which kick in with full force next year, may change that.

Authorities reported no serious incidents Thursday although police said vandals had smashed the windows of three tax offices in Lisbon.

Portugal must cut its budget deficit this year to 5.9 percent of gross domestic product from nearly 10 percent in 2010. In 2012, Lisbon has promised to cut the deficit to 4.5 percent of GDP. Workers' fears, especially in state companies that face big cuts, have been fed by unemployment, which stands at 12.4 percent and is the highest since the 1980s.

(Additional reporting by Daniel Alvarenga and Miguel Pereira; Editing by Andrew Roche)