Brazil's Lula at odds with party over policies

By Mauricio Savarese

SAO PAULO, Sept 3 (Reuters) - Brazil's leftist President Luiz Inacio Lula da Silva has failed to bridge differences with his own party over economic policies and may back an outsider to replace him at the next election in 2010.

Sharp disagreements between Lula and his left-wing Workers' Party, or PT, at a weekend Congress has raised further doubts about whether it will stick to his market-friendly policies when he leaves power.

The 61-year-old former factory worker and union leader remains a popular president and began his second four-year term in January, although his government and the PT have been hit by corruption scandals and internal bickering.

The PT insisted at the weekend meeting that it would present its own candidate at the 2010 election.

But Lula, who has ruled out running for a third term, said he wants a candidate of continuity to replace him, regardless of party affiliation.

"I will fight for the future president to be somebody in line with our project, who can give continuity and depth to the work we began," he told the delegates.

Groups inside the PT have for long criticized Lula's conservative economic policies and his center-right allies, and in recent months pressured his administration to abandon business-friendly labor and union reforms.

Party delegates called for a nationwide plebiscite to consider annulling the privatization of mining giant CVRD in 1997 because of supposed irregularities.