Brazil's Lula and his candidate's approval up-poll

* Improved economic outlook boosts Lula's approval rating

* Most say Brazil's response to global crisis is adequate

* Lula's handpicked successor narrows gap with rival

By Raymond Colitt

BRASILIA, June 1 (Reuters) - An improved economic outlook in Brazil has boosted the approval ratings of President Luiz Inacio Lula da Silva and his preferred candidate in next year's election, an opinion poll showed on Monday.

Dilma Rousseff, Lula's chief of staff and likely candidate for the ruling Workers' Party, gained more than 7 percentage points since March to 23.5 percent of voter intention, an opinion survey by polling firm Sensus showed.

Rousseff's likely rival, Sao Paulo state Governor Jose Serra of the opposition Brazilian Social Democracy Party, fell just over 5 percentage points to 40.4 percent, the poll showed.

Rousseff announced in late April that she was receiving chemotherapy for lymphoma.

"It had no impact," Ricardo Guedes, Sensus director, told a news conference in reference to her illness. Doctors say Rousseff has a 90 percent chance of a full recovery.

"It's the perception that the economy is stable that the government's measures are adequate," said Guedes.

More than half of those polled thought Brazil was adequately handling the global financial crisis.

A Datafolha poll on Sunday showed Serra losing 3 percentage points to 38 percent and Rousseff gaining 5 points to 16. [ID:nN31399647]

Brazil's economy, Latin America's largest, has slowed sharply to an expected contraction of 0.73 percent this year from 5.1 percent growth last year, according to a central bank survey published on Monday.

MORE OPTIMISTIC

But after recovering job and industrial production figures in recent weeks, Brazilians have become more optimistic.

Their assessment of jobs, income, health, education, and public security improved for the first time since September 2008, according to the Sensus poll published by the National Transport Confederation.

Nearly a third of those polled thought that employment had improved, compared to 20.9 percent in March.

The improved economic sentiment boosted the approval rating for Lula, who has gone out of his way to blame the United States for the global crisis and showcase his government's economic measures.

The charismatic former union leader had an approval rating of 81.5 percent, compared with 76.2 in March and an all-time high of 84 percent in January.

Lula has repeatedly said he has no intentions of seeking a third term but a lawmaker in the governing coalition has put forward a proposal for a referendum in September to amend the constitution to allow him run again in 2010.

Rousseff lacks her boss's charisma and her illness has added doubts about her candidacy, but Lula is confident in Rousseff's management abilities and thinks Brazil is ripe for a woman president after he became its first working-class leader.

Rousseff's growth in polls for the October 2010 presidential race is due also to increased media exposure, Guedes said.

More than one-quarter of those polled still did not know who Rousseff was, meaning she had more potential to grow. Only 3.7 percent of those polled said they did not know who Serra was.

The Sensus survey polled 2,000 people between May 25 and 29 and has a margin of error of plus or minus 3 percentage points. (Editing by Mohammad Zargham)