SAO PAULO/RIO DE JANEIRO - An unexpectedly competitive runoff campaign for Brazil's presidency kicked off on Monday with leftist incumbent Dilma Rousseff and her pro-business rival Aecio Neves racing to win over supporters of an ousted third-place candidate and other voters frustrated with a stagnant economy.
Neves, a centrist senator who has pushed for greater trade and lower government spending but who had been widely written off until the last few days of the campaign, rode a late surge in support to a strong second place with 33.6 per cent support in Sunday's first round of voting.
He will face the leftist Rousseff, who won 41.6 per cent support, in the Oct. 26 runoff that will decide what has been Brazil's most unpredictable election in decades.
Rousseff remains a slight favourite due to her enduring support among the poor, but Neves is within striking distance.
Brazil's main stock index soared as much as 8 per cent early on Monday, and the real currency gained as much as 3 per cent as investors were cheered by the strong showing from the candidate they preferred all along.
Latin America's largest economy has been stuck in a rut for nearly four years under Rousseff, and most of Brazil's business community and Wall Street investors have made no secret of their desire for change.
Both remaining candidates immediately shifted their focus to the 21 per cent of voters who backed the third-place finisher, environmentalist Marina Silva.
Silva's campaign fell apart late in the race amid questions about her shifting views on major issues, but she remains admired by many voters and she could still help swing the election with an endorsement.
Top Rousseff aide Gilberto Carvalho told reporters on Sunday night that he had already spoken to the head of Silva's Brazilian Socialist Party, Roberto Amaral, to ask for their support. "He asked for calm and more time to talk with the party,"Carvalho said.
Most observers believe Rousseff has very little chance of winning formal backing from Silva, after unleashing a barrage of negative ads that contributed to her collapse.
Instead, her best hope may be for Silva to stay neutral, as she did after finishing third in the 2010 race, which could allow Rousseff to peel away her more left-leaning supporters.
Senior officials from Neves' Brazilian Social Democracy Party (PSDB) are hoping for a formal endorsement and they expected to meet with leaders of Silva's campaign on Monday, a party source told Reuters.