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Last Updated: Thursday, 17 November 2005, 09:08 GMT
Senate grills Brazilian minister
Brazil's Finance Minister Antonio Palocci during the Senate hearing
Investors see Finance Minister Palocci as market-friendly
Brazil's Finance Minister Antonio Palocci has told a senate committee hearing that corruption allegations against him are false.

He has been accused of accepting illegal payments while mayor of Ribeirao Preto, in Sao Paulo state.

But Mr Palocci - an ally of the Brazilian president - said allegations were politically motivated and false.

Financial markets in Brazil were shaken earlier this week by rumours that he would resign.

Investors, who see Mr Palocci as market-friendly, feared he might be replaced.

But speaking before the Senate committee, Mr Palocci made clear that he wanted to remain in his post.

He also said that he had no intention of changing his strict economic policies, despite attacks from within the government.

Falling popularity

Brazil's currency, the real, and share markets responded positively to the minister's appearance, but he may face further questioning in congress.

In recent months, the government has been dogged by corruption allegations.

The ruling Workers' Party has been linked to illegal funding and bribery in Congress.

President Luiz Inacio Lula da Silva has not been implicated in the scandal, but he has seen his own popularity ratings fall and his chances of re-election next year damaged.

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