By Anthony Faiola
Washington Post Foreign Service
Friday, October 11, 2002; Page A38

BUENOS AIRES, Oct. 10 -- In the lead up to Brazil's presidential runoff election, leftist opposition leader Luiz Inacio Lula da Silva consolidated his political
backing today as his opponent, the ruling party candidate Jose Serra, struggled to revive his flagging campaign.

Lula, 56, a former factory worker who has spooked foreign investors with his pledges to alter Brazil's market-friendly policies, took a commanding lead in the first
round of voting on Sunday, winning 46 percent of the vote but falling short of the simple majority required for an outright victory. Serra, 60, a political centrist and
the handpicked successor of President Fernando Henrique Cardoso, came in second with 24 percent.

Lula and Serra are heading for a showdown in the Oct. 27 runoff.

Lula appeared to extend his advantage today by winning the support of the Brazilian Socialist Party (PSB), whose presidential candidate, Anthony Garotinho, the
former governor of the state of Rio de Janeiro, came in third Sunday with almost 18 percent of the vote.

"We will campaign for Lula, and we will start as of now," the PSB president, Miguel Arraes, told the Reuters news service in Brazil.

Lula had also won backing this week from the fourth-place finisher in Sunday's first round, former finance minister Ciro Gomes, who won 12 percent.

Even more advantageous to Lula's campaign, however, were the failures today by Serra and his ruling Brazilian Social Democratic Party to shore up support among
long-time political allies who helped bring the party to power in 1994.

A faction of the important Brazilian Democratic Movement Party from the populous and affluent state of Minas Gerais broke ranks with its national leaders who are
supporting Serra and endorsed Lula instead.

In addition, several influential leaders from the right-wing Liberal Front Party, a partner in Cardoso's three-party ruling alliance, also broke with their party's
pro-Serra position.

The momentum in favor of Lula continued to rock the battered economy in Latin America's largest nation.

The plunging currency, the real, reeled toward another record low against the dollar, falling almost 3 percent amid fears that Brazil could be forced to default or
restructure its $260 billion national debt. The real has lost more than 40 percent of its value this year.

Although Lula has said he would honor the national debt, investors are fretting over how his administration would manage the world's eighth-largest economy. The
Central Bank had major difficulties Tuesday during a regularly scheduled sale of government bonds. It was forced to scale back the amount it hoped to sell because
investors were demanding exorbitantly high interest rates.

Special correspondent Nadejda Marques in Rio de Janeiro contributed to this report.

                                               © 2002 The Washington Post Company