LISBON, PORTUGAL - Portuguese Economy Minister Manuel Pinho resigned after making an offensive gesture at an opposition MP during the state of the nation debate in parliament on Thursday.

Pinho placed his two index fingers above his head, a sign representing two horns which in Portugal means calling someone a cuckold, while looking at the leader of the communist parliamentary group, Bernandino Soares.

Soares said he had made a remark about Pinho's handling of the troubled Aljustrel mine in southern Portugal, but added the comment did not merit such a reaction.

Prime Minister Jose Socrates said: 'Nothing justifies this gesture and it's not admissable. This should not have happened. The minister is conscious of how this affects the image of the government. So during the debate he communicated his desire to resign and I accepted it.'

He said he had asked Finance Minister Fernando Teixeira dos Santos to add the economy ministry portfolio to his own until the general election on Sept. 27.

Socrates' ruling Socialist Party took a beating in the European elections in June, which were won by the centre-right Social Democrats and threw open the general election race, which the Socialists had hoped they would comfortably win.

The government has faced heavy criticism on many fronts, including over its public sector reforms and its handling of the economic crisis, which is expected to cause a 3 percent fall in Portuguese GDP this year amid rising unemployment.

Socrates played down the importance of Pinho's resignation and said it was not a fatal blow to his government.

'This was just an episode. One that shouldn't have happened and that affects the government's image, but which has now been corrected this way (with Pinho's resignation),' he said.

Opposition parties attacked the government over the incident, Social Democrat floor leader Paulo Rangel saying it showed the government 'has lost its direction, is totally incapable of dealing with the crisis and has been worn down'.