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Opposition congressmen hold inflatable dolls known as "Pixuleco" of Brazil's former president Luiz Inacio Lula da Silva during the session of the impeachment committee of Brazil's President Dilma Rousseff in Brasilia, Brazil, April 6, 2016. REUTERS/Adriano Machado

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By Maria Carolina Marcello

BRASILIA (Reuters) - Brazilian President Dilma Rousseff moved closer to impeachment when a key member of a Congressional committee said on Wednesday there were grounds for the Senate to put her on trial for manipulating budget accounts in 2014 to boost her reelection prospects.

Congressman Jovair Arantes told the 65-member lower house committee there were "minimal indications" that Rousseff had committed an impeachable crime, but that it was up to the Senate to judge the president.

Arantes had been asked by the committee to review the case and report back. The committee will vote on his report on Monday and submit the result to the full house for a final vote, expected by the end of next week. If two-thirds of the chamber approve the motion, Rousseff will be sent for trial in the Senate. She denies any wrongdoing.

The impeachment effort, a wideranging corruption scandal,

and a deepening economic recession have led to Brazil's worst

political crisis since former President Fernando Collor de Mello

resigned to avoid impeachment in 1992.

Rousseff, Brazil's first woman president, could lose power as soon as May if she does not gain more support in Congress.

Arantes said the delay in treasury transfers to state banks, which Rousseff's opponents say allowed her to increase spending in the run-up to the 2014 election, "evidently" countered fiscal responsibility rules and could be grounds to impeach her.

"The Brazilian people deserve an answer that can only be given by a trial of Rousseff in the Senate," he said.

Accusations leveled at Rousseff's government regarding the massive corruption scandal around state-run oil company Petrobras were not considered in his report, but could be taken into account in a Senate trial, Arantes said.

BOOST TO ROUSSEFF

The president's ouster is uncertain. Surveys by Brazilian media show her opponents have not secured two-thirds of the votes in the lower house to take her impeachment to the Senate. O Globo newspaper reported on Tuesday the opposition was three votes short of a majority in the impeachment committee.

In a boost for her chances of surviving impeachment, the centrist Progressive Party (PP) said on Wednesday it will remain in her governing coalition until the lower house votes.

Rousseff has been negotiating government jobs to retain the backing of allies such as the PP after her main coalition partner, the PMDB, broke away last week to back her impeachment.

"It is clear a majority (of the PP) does not want to break with Rousseff," party leader Senator Ciro Nogueira told reporters. "They will tend to vote for the president over impeachment."

Uncertainty over Rousseff's impeachment fueled volatility on Brazilian markets, with the Sao Paulo stock market Bovespa retreating 1.95 percent on Wednesday.

Bets that Rousseff will be replaced by a more business-friendly administration have rekindled appetite for Brazilian assets, with the real jumping more than 10 percent last month and the Bovespa among the world's best performing stock indexes this year.

If the Senate votes for impeachment, Rousseff would be suspended pending its verdict, and Vice President Michel Temer would become acting president.

But Brazil's political crisis deepened on Tuesday when a Supreme Court judge ordered Congress also to start impeachment proceedings against Temer on the same charges brought against Rousseff.

(Writing by Anthony Boadle; Editing by Daniel Flynn and Alistair Bell)

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