BRASILIA (Reuters) - The political party that launched environmentalist Marina Silva's unsuccessful presidential bid threw its support behind pro-business candidate Aecio Neves on Wednesday for Brazil's Oct. 26 runoff vote against leftist President Dilma Rousseff.
The decision by the Brazilian Socialist Party increases the likelihood that the bulk of Silva's 22 million votes would go to Neves, raising his chances of defeating Rousseff.
Silva, an anti-establishment figure who wanted to change Brazilian politics by ending polarization between Neves and Rousseff's parties, came third in Sunday's first-round vote. She is expected to endorse Neves on Thursday.
Her backing is crucial for Neves, the market favorite running for the Brazilian Social Democracy Party (PSDB). Neves won 33.6 percent of the votes to Rousseff's 41.6 percent, a difference of 8 million votes.
Silva surged in the polls in late August when she was thrust into the race by the death of her running mate and original PSB presidential candidate Eduardo Campos in a plane crash. But her popularity was undercut by an aggressive media blitz by Rousseff that linked her to Brazil's financial elite and questioned her ability to govern without the backing of traditional parties.
"I have become the candidate of change," Neves said at the PSB's headquarters in Brasilia, where he paid homage to the party's late leader Campos. "His dreams are now my dreams. His commitments have also become my commitments," Neves said.
PSB Senator Rodrigo Rollemberg said his party backed Neves because alternation in power was needed in Brazil after the country stagnated for the last four years under Rousseff.
Neves is also seeking endorsement by the influential family of Campos, a former governor of the northeastern state of Pernambuco, where some 2 million votes won by Marina are up for grabs.
"With the explicit support of Marina and the family of Eduardo Campos, Neves can grow in poorer parts of Brazil like the Northeast where Rousseff has a lot of votes due to her government's social programs," said political scientist Carlos Melo of the Insper, a leading Brazilian business school.
Rousseff kicked off her campaign for the runoff on Wednesday with a whistle-stop trip to Northeastern states to protect her bastion of support from inroads by Neves, who is more popular in the industrialized and agribusiness states of Brazil's south.
Her campaign is portraying a Neves government as one that will bring recession, unemployment and income losses, citing the austerity policies enacted by past administrations of her rival's party.
Investors do not see it that way. Brazilian stocks soared and the currency strengthened early this week on the prospect that Neves could defeat Rousseff, whose heavy-handed economic policies are blamed for driving a once-booming economy into recession this year.
There was more bad news for Rousseff on Wednesday.
Inflation sped up to its highest rate in nearly three years, raising the prospect of higher interest rates next year. Brazil also got another debt downgrade warning by Moody's Investors Service.
Reporting by Anthony Boadle; Editing by Lisa Shumaker