Serra accepts Brazil candidacy, hits Lula on ethics

* Serra formally accepts opposition candidacy

* Says would support human rights at home and abroad

* Faces tough fight against Lula's candidate Rousseff

By Natuza Nery

SALVADOR, Brazil, June 12 (Reuters) - Jose Serra formally became the presidential candidate of Brazil's main opposition party on Saturday, saying he would run a more ethical government at home and abroad than President Luiz Inacio Lula da Silva.

Serra, an economist with a long track record in government, was anointed as candidate at a convention of his centrist PSDB party in the northeastern city of Salvador, four months ahead of October's presidential election. [ID:nN09243047] [ID:nN09253247]

"I believe in human rights, inside Brazil and outside," Serra said in a speech. "It is not good to continually eulogize dictators in all corners of the planet."

Lula, who basks in sky-high popularity ratings in Brazil, has maintained close diplomatic ties with countries criticized for human rights abuses, including Cuba and Iran.

Serra also criticized the governing coalition over several corruption scandals that have erupted since Lula, a former metal worker, began his first term in 2003. Lula is barred by the constitution from running for a third straight term.

Serra must develop a strategy to overcome Lula's disciple, Dilma Rousseff, who can count on the president's popularity and a rebounding economy.

Those advantages make Rousseff, of the center-left Workers' Party, the favorite for most pundits. But Serra's broad executive experience and national profile make him a formidable rival for Rousseff, who is untested in elections.

The Workers' Party holds a convention on Sunday at which it will confirm Rousseff's candidacy.

Rousseff has been gaining ground on Serra in recent opinion polls, thanks to the improving economy and her growing national profile, and was level with him at 37 percent support in the most recent national poll released this month.

NO RUNNING MATE FOR SERRA YET

Serra is favored by some investors for his perceived fiscal discipline and reputation as a competent administrator, even though neither he nor Rousseff are seen as straying much from Lula's largely market-friendly economic policies. [ID:nRISKBR]

Opposition leaders say they plan to play up Serra's experience and try to prevent Rousseff from making the election a plebiscite on Lula's eight years in power, which have seen Brazil's economy power ahead and millions of people lifted out of poverty.

The governing coalition's PMDB party also held its pre-election convention on Saturday at which it confirmed its election alliance with the Workers' Party and was expected to confirm its leader, Michel Temer, as Rousseff's running mate. Temer is a veteran federal deputy from Sao Paulo state.

The leader of the centrist PMDB in the lower house of Congress, Henrique Eduardo Alves, told Reuters on Saturday the party would have a strong role in a Rousseff government and had already presented policies to her that would "neutralize" some elements of the Workers' Party platform.

"We will have a coalition in the campaign, in the electoral program and in the future government, so we have everything to be a government that is representative of Brazilian society," he said.

Serra has yet to pick his vice-presidential candidate, which some analysts say is evidence that his campaign has been slow to prepare for the race. (Additional reporting by Ana Nicolaci da Costa and Fernando Exman in Brasilia; Writing by Stuart Grudgings; Editing by John O'Callaghan)