He wants 60 pct of the work to be contracted to domestic companies, for the rail, telecoms and ICT specialities and for the train interiors, Lusa newsagency reported.

Lino said he believes the increase in orders in the relevant sectors will lead to growth in the economy.

The fact that Portugal is experiencing economic difficulties does not justify suspension of the high speed train project, he said.

The government is prioritising the lines between Lisbon and Porto and between Lisbon and Madrid, because they offer better economic returns.

Construction of the Lisbon-Porto line will require investment of 4.7 bln eur and the Lisbon-Madrid link 3 bln, while rail components will cost another 600 mln and rolling stock 480 mln, according to Lino's projections.

The government estimates that the project will generate operating cash flow covering 38 pct of the investment and the EU will contribute 22 pct, leaving the government to find the remaining 40 pct, Lusa reported.

Diario Economico cited Lino as saying private companies are likely to fund 30-30 pct of the project.

The proposals are 'positive for most players' in the Portuguese construction sector and could also benefit Spanish companies, Bruno Almeida da Silva and Ana Horno of Banco BPI said in a note to clients.

'In our view, construction companies should benefit the most, with Mota Engil and Teixeira Duarte being the obvious winners and Cimpor and Semapa indirectly benefitting due to the expected uplift in cement consumption,' they said, adding that motorway operator Brisa 'could also have a role in the project'.

The high speed train is likely to directly compete with air connections between Porto and Lisbon, with air traffic estimated to be slashed by 40 pct, Da Silva and Horno said.

Between Lisbon and Madrid, the rail line is likely to absorb 'around 30 pct of the air traffic,' the BPI analysts said.