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imageSAO PAULO: Brazil Bovespa stock index briefly touched its highest level in more than a year and a half on Tuesday, driven by rising expectations that President Dilma Rousseff could lose her bid for re-election in October, although the market edged lower later in the session as investors took profits.

The broader MSCI Latin American stock index rose for the eighth session in nine, while most of South America's currencies strengthened.

Brazil's stock market has rallied for nearly two weeks as electoral polls showed a surge of support for opposition candidate Marina Silva that made it near certain that Rousseff would not win an outright re-election on Oct. 5.

Many investors have criticized Rousseff for mismanagement of the economy and for enacting policies detrimental to minority shareholders of state-run companies such as oil producer Petroleo Brasileiro SA, known as Petrobras.

Preferred shares of Petrobras have risen more than 20 percent over the past eight sessions and briefly traded at their highest price in nearly two and a half years on Tuesday before settling slightly lower in the afternoon.

"Investors in Brazil remain focused on presidential elections and its potential impact on equities," Bank of America Merrill Lynch analyst Felipe Hirai wrote on Tuesday.

"As recent polls indicated Marina Silva could be a very competitive candidate, even beating incumbent President Dilma in an eventual 2nd round, the market seems to be increasing the chances of an opposition-winning scenario."

The next electoral poll is expected to be released later on Tuesday, followed by another on Wednesday, and investors are betting they will show Rousseff losing ground.

Bank shares also weighed on the Bovespa index after data showed growth in loan books slowed for a sixth straight month in July while delinquencies rose.

In currency markets, the Brazilian real strengthened against the dollar following four straight days of declines.

Traders said expectations for the polls helped support the real, as a non-Rousseff government would likely reduce the country's risk profile among global investors.

Elsewhere in Latin America, the Colombian and Mexican pesos both gained about 0.35 percent against the dollar.

Colombia's central bank will likely raise interest rates for a fifth straight month on Friday as policymakers see the economy having reached its potential growth level, according to a Reuters survey on Monday.

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