RPT-UPDATE 3-Brazil's Rousseff widens lead, rejects budget cuts

* Poll confirms surge in other recent surveys

* Economy, Lula, TV ads boost Rousseff candidacy

* Rousseff: "Why on earth would I make budget cuts?"
(Repeats with fresh link to Rousseff budget comments)

By Natuza Nery

BRASILIA, Aug 24 (Reuters) - Brazil's ruling party
presidential candidate Dilma Rousseff looked set to win the
October vote without a runoff after a new poll on Tuesday
showed her with a commanding 22 percentage point lead over her
nearest challenger.

With the election less than six weeks away, Rousseff has
taken full advantage of recent free TV time to link her name
with President Luiz Inacio Lula da Silva, whose management of
Brazil's booming economy has made him massively popular with
the working class and foreign investors alike.

The sizable lead has allowed Rousseff to begin turning her
attention to what her government might look like, despite an
outcry from the opposition that she is prematurely measuring
the drapes for the Planalto Palace in Brasilia.

Rousseff forcefully rejected a report that she would enact
special austerity measures to win over foreign investors, some
of whom are concerned about heavy election-year spending and
other imbalances such as a yawning current account deficit.

"Why on earth would I make budget cuts?" Rousseff asked
reporters, pointing out that inflation is under control and
Brazil's international reserves are at record high levels.

The survey by the Sensus polling institute was the second
in four days to show Rousseff with the absolute majority of
votes needed to win the Oct. 3 election outright.

One measure showed her leading by a 46-28 percent margin
over her nearest challenger, Jose Serra. But if spoiled or
blank votes are thrown out, as they are on election day, she
has 55.3 percent support compared to 33.7 percent for Serra.

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Graphic on latest poll: link.reuters.com/pep86n

For a factbox on recent polls, click on: [ID:nN24259710]

More Rousseff comments on budget cuts: [ID:nN24265576]

Factbox on political risks in Brazil: [ID:nRISKBR]

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Lula is prohibited from seeking a third term but the debut
of free TV time last week for candidates has featured repeated
ads showing him and Rousseff together. At campaign events, Lula
has referred to her as "my president" and said his former chief
of staff is best-positioned to continue his policies.

Rousseff "has done a good job of capitalizing on Lula's
popularity and she has been able to establish herself as his
right-hand person," Clesio Andrade, the head of Brazil's
National Transport Confederation, which commissioned the poll,
told reporters.

'THE ELECTION HASN'T EVEN BEGUN,' SERRA SAYS

Serra's TV ad on Tuesday accused Rousseff of "getting
carried away with herself," highlighting recent media reports
that she is already negotiating with coalition members for
cabinet posts.

"The election hasn't even begun yet," a narrator in the ad
said.

Yet Rousseff's lead is now so large that, at a joint
campaign event in a working-class suburb of Sao Paulo on
Friday, Lula spent almost as much time singing the praises of
his party's candidate for state governor as he did touting
Rousseff.

The 62-year-old former energy minister and career
technocrat has never run for public office. Although she has
struggled to emulate Lula's common touch with voters, some
analysts say that only a major event like a corruption scandal
could derail her candidacy at this point.

Serra, a 68-year-old former governor of Sao Paulo state,
has labored to establish a distinct agenda from Rousseff
without running the risk of criticizing the popular Lula.

A candidate must receive more than half of valid votes to
avoid a runoff. A survey released by the Datafolha pollsters on
Saturday also showed Rousseff winning in the first round.

The Sensus poll surveyed 2,000 people between August 20-22
and has a margin of error of plus or minus 2.2 percentage
points.

(Additional reporting by Eduardo Simoes in Sao Paulo,
Writing by Brian Winter; editing by Todd Benson and Todd
Eastham)