Brazil's pro-labor president was dealt a setback in his quest to broaden his party's influence to cities nationwide.

BY KEVIN G. HALL
Knight Ridder News Service

RIO DE JANEIRO - Voters in Latin America's largest democracy Sunday appeared to deal a setback to the center-left Workers' Party in national municipal elections that served as the first referendum on Brazil's pro-labor president.

Nationally televised exit polls and early returns for the most important of Brazil's 5,562 mayoral races suggested President Luiz Inácio Lula da Silva's Workers' Party had failed to significantly build influence since its arrival to power last year. Although larger cities released early results Sunday night, final nationwide results were not expected before today.

Mayoral races in Brazil are an important midway measure for any sitting president. They act as a vote of confidence on the first two years of a presidential term. They also trigger shifts in congressional alliances and Cabinet shuffles to position for coming presidential campaigning.

Lula da Silva and his Workers' Party captivated the world's attention in October 2002 when the former leftist union leader won the presidency on his fourth try. The president has aggressively challenged U.S. foreign and trade policy and promised radical social change, but has stuck to the free-market economic policies of his predecessor and moved to the political center. That pleases the United States and other foreign investors, but bothers many Brazilians.

Roberto Chaves, an information technology specialist in Rio de Janeiro, voted for Lula da Silva in 2002 but against the ruling party Sunday. He wanted change and is upset that interest rates remain a high 16 percent to capture investment at the expense of consumers.

'The PT [Workers' Party] had one position when in the opposition but when they assumed office they followed exactly the policies'' of the previous government, he said.

Preelection opinion polls suggested the ruling party would gain ground in midsize cities but lose ground in Brazil's most populated cities, a troubling omen for Lula da Silva's reelection hopes in 2006. The apparent setbacks would benefit the centrist Brazilian Social Democracy Party, which ruled Brazil from 1994 to 2002.

The two parties were battling it out vote for vote in Sao Paulo, South America's largest and wealthiest city. The ruling party's incumbent mayor, Marta Suplicy, was headed to an Oct. 31 runoff with the Social Democracy Party's Jose Serra, who was defeated by Lula da Silva for the presidency.

INCUMBENT TRAILS

With 90 percent of the vote counted, Serra led Suplicy in Sao Paulo by a wider than expected margin of 43 percent to 35 percent.

In Rio de Janeiro, the second-biggest city, incumbent mayor Cesar Maia of the Liberal Front Party apparently won a first-round victory with 50.1 percent of the vote, according to early returns. The second-place candidate had garnered just 20 percent.

Going into the vote, the ruling party controlled eight of 26 state capitals, and on Sunday held six, with 70 percent of the vote counted. The ruling party was confirmed to be in another nine runoff races in state capitals, including Sao Paulo.

After the early results in Sao Paulo were announced, Serra said ''the will of the people'' would select winners on Oct. 31.

Shortly before midnight, Suplicy called on her supporters to regroup for the runoff battle. ``This city was finished. I managed to give it a jump ahead and I want the opportunity to continue that work.''

Aloisio Mercandante, the ruling party's senate leader, put a positive spin on the numbers, saying the party was thrilled to be in the nine runoff races. ''It is a spectacular result and it will give great morale to our party faithful,'' he said. Runoffs were expected in two dozen or more major cities.

The ruling party was projected to gain an outright victory in the city of Belo Horizonte, the state capital of Minas Gerais, where one of Lula da Silva's potential presidential challengers, Aecio Neves, governs.

The ruling party also appeared set to hold the northeastern city of Recife, despite the fact that the city's favorite son Humberto Costa -- now the president's health minister -- has been tarnished by a fraud scandal. Costa was hit in the head with a rock Sunday as he appeared with the party's mayoral candidate, but escaped serious harm.

But in Sao Bernardo do Campo, the president's hometown, the mayoral victory went not to the ruling party but to the Brazilian Socialists Party (PSB) candidate.

IN SAO PAULO

Meanwhile, top Workers' Party leaders immediately began campaigning for runoff votes in Sao Paulo, a city whose electoral weight is the decisive equivalent to California in Brazilian politics.

''The runoff round is another election. When you have a scenario like this, all polls and all antecedents show it is a new election,'' Jose Dirceu, Lula da Silva's powerful chief of staff, said Sunday.

Almost as soon as the vote counting began, Jose Genoino, the president of the ruling party, began reaching out to former Sao Paulo Mayor Paulo Maluf. Mired in a money-laundering scandal, Maluf is now in the position of kingmaker. ''We want the vote of all the Malufistas, including his vote,'' Genoino said.