By Marcela Ayres and Ricardo Brito
BRASILIA (Reuters) - Brazilian markets surged on Tuesday as stronger polling for far-right presidential candidate Jair Bolsonaro and a Congressional farm caucus endorsement boosted expectations that he may block the leftist Workers Party from returning to power.
The benchmark Bovespa stock index jumped 3.8 percent, flirting with a four-month high, and Brazil's currency, the real, strengthened 1.93 percent, closing below 4 per dollar for the first time in six weeks.
Markets are likely to see more gains on Wednesday after the latest Datafolha poll, released after the bell, showed Bolsonaro extending his first-round lead over the Workers Party candidate Fernando Haddad, and indicating the right-winger could win an expected runoff vote.
That followed an Ibope poll on Monday that also showed Bolsonaro pulling away from Haddad, with a 10-point lead ahead of Sunday's first round.
"Bolsonaro's tide is rising," the Guide brokerage firm wrote to clients in a Tuesday research note. "Many forecast that Bolsonaro would not grow more in the polls. But last night's numbers show the opposite."
In the likely case of an Oct. 28 runoff vote - required by Brazilian law if no candidate wins a majority in the first round - the Ibope poll showed Bolsonaro in a dead heat with Haddad, while the Datafolha poll gave Bolsonaro a narrow lead.
However, a significant minority of voters remain undecided and rejection rates for both the two frontrunners are high and growing, reflecting the increasingly polarized and febrile atmosphere.
Bolsonaro's history of misogynist comments has riled many women and led to a social media campaign using the #elenao - or, #nothim - hashtag in opposition to him. Last weekend saw the largest female-led street demonstrations Brazil has seen in decades denouncing the candidate.
Yet his support among women overall rose 6 percentage points in the Ibope poll from a week ago.
Bolsonaro's hardline rhetoric on crime garnered early support from Brazil's farm belt, where booming plantations are threatened by land invasions and robberies. The Parliamentary Agricultural Front, which includes over 260 senators and lower house representatives, formally endorsed their fellow lawmaker on Tuesday.
Bolsonaro celebrated the endorsement in a video released over social media. He pledged to combine the Agriculture and Environment Ministries, which he said would solve many of the farm sector's problems, without elaborating.
(Reporting by Marcela Ayres and Ricardo Brito in Brasilia, additional reporting by Claudia Violante in Sao Paulo; Writing by Brad Haynes and Brad Brooks, Editing by Rosalba O'Brien)