Lula's Party Wins Six Capitals; Sao Paulo Mayor Heads to Runoff

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Oct. 4 (Bloomberg) -- Brazilian President Luiz Inacio Lula da Silva's Workers' Party won mayoral races in six state capitals and had candidates leading in three others, putting it on track to increase control of the nation's largest cities.

In Sao Paulo, Mayor Marta Suplicy, a Lula ally, was headed for a runoff vote Oct. 31 after placing second to Jose Serra, who made a failed bid for the presidency in 2002, according to figures published on the Superior Electoral Court's Web site with almost all of the votes counted. Prior to the election, Lula's party ran seven of the nation's 26 state capitals.

The Workers' Party's gains will offset a possible loss in Sao Paulo, Brazil's biggest city with a population of 18 million, said John Welch, chief Latin American strategist at Lehman Brothers Inc. in New York. Lula, 58, campaigned on behalf of Suplicy, a former TV sex therapist who is seeking reelection on promises to improve education, healthcare and transportation for the poor.

``The Workers' Party looks like it's going to lose Sao Paulo but that's not Lula's fault -- it's Marta's,'' said Welch in an interview from New York. ``Both sides can say they're winning and as an investor I'm comfortable with that -- it'll help keep some of the more extreme trends in the Workers' Party at bay.''

Bloomberg