SPA ETF Europe Ltd. has teamed up with NYSE Euronext and Portuguese bank Caixa - Banco de Investimento (CaixaBI) to bring out the first-ever exchange-traded fund in Portugal.

In addition, the deal is the first continental European distribution deal through which SPA ETF will offer a country-specific fund.

The SPA ETF PSI-20 listed Wednesday on the NYSE Euronext in Portugal. It tracks the PSI-20, which is made up of the largest 20 stocks in Portugal based on market-cap size.

Shares are being traded on the PSI Geral, the main stock market index of the Lisbon Exchange. It is one of the main country indexes in Euronext's pan-European country index group.

The companies said they see immediate demand for the product from both the retail and institutional markets.

As an example, Euronext's NextTrack market for exchange-traded and structured funds had daily average turnover of 357 million euros in 2008, an increase of 22% compared with the average for 2007.

Recent industry reports have highlighted the growth potential in the European ETF market, and argued that it is larger than the opportunity in the U.S. ETF market, which has already gone through its most explosive growth phase. The retail market in Europe, in particular, is expected to pick up in the next few years, and several major European distribution platforms are first getting into the ETF distribution business now, such as Commerzbank.

SPA ETF said in a statement that it plans to set up additional distribution deals in Europe.

The ETF provider is based in London and its existing ETFs are based on a series of indexes created by independent research house MarketGrader.

The only other European market in which SPA ETF has a foothold is Italy, where it has offered versions of its existing MarketGrader funds.