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Published: Sunday June 15, 2014 MYT 11:45:24 AM
Updated: Sunday June 15, 2014 MYT 11:45:24 AM

Opposition candidate closes in on Brazil's Rousseff ahead of vote

Brazil's President Dilma Rousseff smiles during a signing ceremony with Chile's President Michelle Bachelet at the Planalto Palace in Brasilia, June 12, 2014. REUTERS/Ueslei Marcelino

Brazil's President Dilma Rousseff smiles during a signing ceremony with Chile's President Michelle Bachelet at the Planalto Palace in Brasilia, June 12, 2014. REUTERS/Ueslei Marcelino

SAO PAULO (Reuters) - Brazil's main opposition party launched the candidacy of its leader Aecio Neves on Saturday to challenge President Dilma Rousseff's re-election bid in October on a platform of fiscal austerity and pro-market policies.

"Enough is enough," Neves said in an acceptance speech at the centrist PSDB party convention. He lambasted the leftist Rousseff for squandering public money and undermining the financial stability given to Brazil by the real currency plan adopted by former PSDB president Fernando Henrique Cardoso.

Neves, a senator with a successful record as governor of Brazil's second-richest state, Minas Gerais, is chipping away at Rousseff's lead less than four months from election day, a poll published on Saturday showed.

Rousseff dropped to 32.2 percent this month from 34 percent in a previous poll in April, while Neves climbed to 21.5 percent from 19.9 percent, the polling firm Sensus said.

The poll confirmed the results of other recent surveys that predict Rousseff, whose popularity has been dragged down by economic uncertainty and a high cost of living, will not win enough votes on Oct. 5 to avoid a bruising second round.

Rousseff is still favoured to win a runoff by 37.8 percent against 32.7 percent for Neves, but the gap between them has narrowed to 5.1 from 6.7 percentage points in April, according to Sensus.

The polls suggest the October election could be the toughest for the ruling Workers' Party since it came to power in 2003 led by Rousseff's predecessor and mentor, former union leader Luiz Inacio Lula da Silva.

Polls showing declining support for Rousseff have boosted the Sao Paulo stock market <.BVSP>, which hit a seven-month high on Wednesday, as investors bet on a move away from heavy state intervention in the economy under Rousseff's government.

Neves, 54, plans to restore vitality to Brazil's once booming economy by adopting more business-friendly policies and reining in the expansion of public spending to less than the GDP rate of growth.

But in an interview with Globo TV broadcast on Friday, Neves warned that a fiscal adjustment would not happen overnight and said it could take two or three years to bring inflation down to the centre of the government target of 4.5 percent, from close to the ceiling of 6.5 percent at present.

"Our government will create a more serene and propitious climate for the market, which is important to recover investments and grow," Neves said.

"We will have a more austere and transparent fiscal policy than we have today," he said. "People want to trust again in government numbers, fiscal policy and inflation targets."

Neves called Rousseff's intervention in the electricity sector "perverse" and said her government's attempt to lower power rates scared off investors and cost taxpayers 30 billion reais ($13.50 billion) so far.

Neves said he would maintain the social programs that have helped reduce poverty in Brazil under the Workers' Party. But he plans to reduce the size of federal government and establish a meritocracy based on performance like he did in Minas Gerais.

($1 = 2.2228 reais)

(Additional reporting by Jeferson Ribeiro in Brasilia; Writing by Anthony Boadle; Editing by Stephen Powell, Bernard Orr)

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