(Adds close of market, context on state companies rise)
By Paulo Prada
RIO DE JANEIRO, March 27 Popular support for
Brazilian President Dilma Rousseff has faltered ahead of the
Oct. 5 presidential election, a poll showed Thursday, but the
leftist leader remains favored to win a second term.
Hurt by a sluggish economy, high inflation and a scandal
surrounding Brazil's state-run oil company, Rousseff's personal
approval rating has dropped to 51 percent from 56 percent in
November, the survey by the Ibope polling institute and Brazil's
National Industry Confederation showed.
Support for her administration fell to 36 percent from 43
percent in the previous poll, while 27 percent of those polled
disapproved of the government, compared with 20 percent in
November. The latest poll was taken from March 14-17 and has a
margin of error of 2 percentage points.
The drop in support, which led to a sharp rally in Brazilian
stocks and boosted the country's currency on Thursday, reflects
the challenges that Rousseff must overcome to win re-election.
"It shows that 2014 is going to be a hard year for the
government," said Rafael Cortez, a political analyst with
Tendencias, a consultancy in São Paulo. "All these negative
issues are hurting her image as a candidate."
Although Rousseff and her ruling Workers' Party still enjoy
widespread support because of economic gains made during the
administration of former President Luiz Inácio Lula da Silva,
her mentor and predecessor, Rousseff is currently presiding over
the fourth year of lackluster growth in Latin America's largest
Price increases and a lack of investment in the country's
public services led to mass nationwide demonstrations last year
that have caused many voters to question the Workers' Party's
12-year grip on the presidency.
Some voters are also critical of the billions of dollars
worth of public funds that have been spent on 12 stadiums for
the 2014 soccer World Cup, which kicks off in São Paulo June 12.
Struggling businesses, meanwhile, have increasingly
complained about what they perceive as the government's
short-sighted and interventionist management of the economy.
Rousseff has focused mostly on curbing costs through tax breaks
and price controls, not the sort of structural reforms that
economists have long argued are necessary to make Brazil more
Fueled by investor hopes that support for Rousseff could
dwindle further, Brazilian assets, especially stocks of
state-controlled companies, soared.
Companies such as oil giant Petroleo Brasileiro SA
and Eletrobras, Brazil's largest utility,
have lost half of their market value on Rousseff's watch and the
prospect that she could lose the election or emerge with a
weaker mandate prompted interest in their shares.
Brazil's benchmark Bovespa index rallied to its
highest level in over two months to close up 3.5 percent at
49,646 points, while the real strengthened 2 percent
against the dollar.
Recently, Rousseff also has been roiled by the ongoing
scrutiny of a 2006 purchase of an oil refinery in Texas by
Petrobras. As chairwoman of the oil company's board at the time,
Rousseff approved the transaction, which is now being criticized
as too costly.
Still, other recent polls suggest that Rousseff is still
likely to win re-election.
An Ibope poll of voter intentions last week found Rousseff
has 43 percent of the electorate's support, against 15 percent
for Senator Aecio Neves of the main opposition party and 7
percent for Eduardo Campos, governor of the northeastern state
(Additional reporting by Jefferson Ribeiro and Eduardo Simões;
Editing by Brian Winter, Peter Galloway, Paul Simao and Lisa
Shumaker; Editing by Brian Winter, Peter Galloway and Paul