There have been sharp falls on Brazil's stock markets, a day after Congress rejected a key measure in the government's austerity programme.

Shares closed down nearly nine-per-cent in Sao Paulo and Rio de Janeiro.

Analysts say traders were reacting to the decision by deputies to block a proposal to raise the pension contribution from civil servants.

The measure would have increased government revenues by some four billion dollars.

The government is committed to tackling the huge budget deficit as part of an agreement with the International Monetary Fund for a forty-one billion dollar rescue package.

On Wednesday the IMF approved the first emergency payment to Brazil, of five point three billion dollars.