By Anthony Faiola
Tuesday; Page A17

RIO DE JANEIRO, Oct. 7 -- On the steaming sands of Ipanema beach, Lucia Araujo beamed as she stood next to her flag bearing the red star of the Workers'
Party, which scored its greatest electoral victory ever on Sunday in the first round of Brazil's presidential vote.

The Workers' Party candidate, labor leader Luiz Inacio Lula da Silva, failed to win the 50 percent plus one needed to avoid a runoff on Oct. 27. But he trounced his
competitors and is seen as well-positioned to return the left to power in Latin America's largest nation for the first time in four decades.

"We are so close now, so very close," said Araujo, 37, who has now voted for Lula four times, including his failed bids for the presidency in 1989, 1994 and 1998.
"We've waited 13 years for this, so we can wait another three weeks. We still have to convince a few more people that the time has come for Lula, but finally, the
momentum is on our side."

One day after the first-round vote, Brazil's left cautiously celebrated a partial victory. The final results showed that Lula, a former factory worker who won 46
percent of the vote, will face the ruling party candidate, political centrist Jose Serra, who won 23 percent, in a runoff scheduled to fall on Lula's 57th birthday.

Lula appeared confident today, especially given that two other left-leaning candidates in the race, former Rio state governor Anthony Garotinho and former finance
minister Ciro Gomes, placed a strong third and fourth, respectively. Gomes today offered his backing for Lula in the second round, according to Lula campaign
sources. Both Lula and Serra are reportedly in negotiations to win the same promise from Garotinho.

Analysts said the left's big gains reflected mounting discontent in Brazil and across Latin America with the "Washington consensus," which asserted that free market
reforms and privatization would improve the lives of Latin Americans who opened their economies to U.S.-style capitalism during the 1990s.

"Yesterday, 76 percent of the population voted in favor of a new economic model for this country," Lula said, referring to his vote tally combined with those of
Garotinho and Gomes. "This was a majestic victory . . . for the left. I want to thank all the people who this time did not have fear of change."

But financial markets, which have battered the currency, stocks and bonds in the world's eighth-largest economy as Lula has risen in the polls, appeared even more
apprehensive in the face of such change. The markets seemed to send Lula yet another message that any change in the economic policies in place under the
eight-year stewardship of President Fernando Henrique Cardoso should not be too abrupt.

Brazil's leading Sao Paulo Stock Exchange index fell 4.28 percent and the embattled Brazilian currency, the real, shed another 3.3 percent of its value against the
dollar after already dropping 37 percent this year.

Meanwhile, the campaign of Serra, Cardoso's handpicked successor and the preferred candidate of financial markets, appeared to struggle for direction as his top
political adviser, Sen. Joao Pimenta da Veiga, quit and Serra himself stayed at home for much of the day with a flu.

"We're starting a new fight today. . . . We have 21 days and . . . we will use every day to discuss new problems," Serra said in brief comments to reporters. "More
than discuss them, we will also dedicate each day to explaining just how and who can really solve them."

Serra, an economist and Cardoso's former health minister, carried only one of Brazil's 26 states Sunday -- the poor and sparsely populated northeastern state of
Alagoas. Lula carried 24 states and the federal district of Brasilia. Gomes, who finished fourth with 12 percent of the vote, carried his home state of Ceara, in the
northeast.

Serra, 60, is seen by foreign investors as a steadier, more professional candidate. His best hope for gaining ground, analysts said, is to try to forge political alliances
with several center and right-wing parties. But early indications were that he might have difficulties.

Key to Serra's success will be winning over the conservative Liberal Front Party, which has for years been in an alliance with Serra's ruling Brazilian Social
Democracy Party.

Yet analysts said Serra, who became internationally renowned for pressuring foreign pharmaceutical companies to lower the cost of AIDS drugs to developing
nations, is actually quite close to Lula in his political thinking. Both, for instance, advocate a tougher line on trade negotiations with industrialized powers such as the
United States and European nations, demanding that rich countries drop agricultural subsidies that damage Brazilian exports before they would sign any new free
trade agreements.

"If Sunday's vote showed anything, it's that Brazilians are very frustrated with current economic policies," said Alexandre Barros, a Brasilia-based political analyst. "It
doesn't matter if Lula or Serra wins. You won't be seeing any more privatizations in Brazil for at least another few years."

But Serra is seen as more in tune than Lula with the views of investors and international financiers on what ought to be done to fix Brazil's economy. That is viewed
as vital to Brazil's ability to maintain its relationship with the International Monetary Fund, which recently threw the troubled economy here a record $30 billion
lifeline.

Serra has also said he would keep Brazil's Central Bank president, Arminio Fraga, who is widely admired by foreign investors. Lula, on the other hand, has said he
would not keep Fraga. When pressed by reporters today to provide details on who would make up his economic team, Lula insisted he had not made up his mind.

Special correspondent Nadejda Marques contributed to this report.

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