The injured holidaymakers, who included youngsters from both groups, are said to be aged between 17 and 21. They were assisted by emergency responders including paramedics, police and the Red Cross before being taken to hospital.
Four were described as being in a “serious” condition when they were assisted at the scene and another was said to be suffering minor injuries.
Portugal’s GNR police force played an initial key role although another force, the Policia Judiciaria, has now been briefed and is expected to take over the investigation.
Sources close to the ongoing inquiry said the tourists could face an attempted murder charge or even murder charges if any of the stab victims die.
No formal arrests have yet taken place. Three knives are understood to have been seized by police.