SAO PAULO, Brazil -- (AP) -- The first Brazilian president ever to win
             reelection, Fernando Henrique Cardoso must now put his popularity through an
             even tougher test -- harsh austerity measures needed to break Brazil's economic
             meltdown.

             Cardoso inched closer Monday to a first-ballot victory as returns came in from the
             interior, where the government historically does well. Cardoso must win more than
             half the vote in Sunday's election to avoid a second-round runoff -- a feat he is
             expected to easily accomplish.

             But a tougher task lies ahead: to rein in the international financial crisis that began in
             Asia and, like a domino, now threatens his country.

             The prospect that the newly reelected Cardoso may slash government spending
             and increase taxes helped lead the Brazilian stock markets lower Monday, closing
             off 4.5 percent in Sao Paulo and 3.4 percent in the smaller Rio de Janeiro
             exchange.

             The United States and other major industrialized nations, deeply concerned about
             Brazil, worked Monday on a multibillion-dollar bailout package as President
             Clinton convened a meeting in Washington of officials from 22 nations trying to
             overcome the economic crisis.

             With 64.5 percent of the ballots counted Monday, Cardoso was leading with 51.2
             percent. His closest rival, Luiz Inacio Lula da Silva of the leftist Workers Party,
             had 34 percent, while Ciro Gomes of the Popular Socialist Party had 11 percent.
             Nine other candidates shared the rest.

             To most observers, Cardoso has received a clear mandate not only to run Latin
             America's largest nation for the next four years but also to protect its economy
             from the financial turmoil rocking emerging countries, including Brazil.

             ``In reelecting Cardoso, voters clearly demonstrated their confidence in his
             political leadership and his ability to steer Brazil through the world financial crisis,''
             said Carlos Esteban Martins, a political scientist at the University of Sao Paulo.

             Cardoso's popularity is largely the result of the success of the ``Real Plan'' -- the
             economic stabilization plan he helped put together in 1994 when he was finance
             minister. It dropped inflation from around 2,400 percent a year to near zero now.

             Since its introduction, the Real Plan has been shored up by high interest rates and
             an overvalued real, the Brazilian currency. Together, they guaranteed price stability
             but caused recession, unemployment and public and trade deficits.

             On the eve of the elections, Cardoso promised to tackle the economy's main
             Achilles' heel -- a budget deficit equal to 7.3 percent of gross domestic product --
             and hinted that taxes would be increased.
 

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