RIO DE JANEIRO, Brazil -- Brazilian presidential candidates kicked off their campaigns in the streets on Saturday, just as fresh opinion polls showed the ruling party's hopeful slipping and under threat of losing his second position, Reuters said.

In Brazil's biggest city of Sao Paulo, the frontrunner for the October elections, Luiz Inacio Lula da Silva of the left-wing Workers Party, headed a small rally of about 500 people who gathered under red flags on a cold morning.

Lula has moderated his past socialist rhetoric in his fourth attempt at the presidency, but still spooks investors, wary of a $250 billion debt load of Latin America's largest economy. Markets have been pummeled by sell-off for weeks.

Lula edged up to 39 percent support in a Vox Populi poll of voting intentions released on Saturday from end-June's 38 percent. He slipped to 38 percent in a bigger Datafolha poll, which compares to 40 percent a month ago. However, he retained his big lead.

Investors hope that former health minister Jose Serra from President Fernando Henrique Cardoso's PSDB Party will win and continue Cardoso's market-friendly policies like inflation targeting, fiscal responsibility and debt commitments.

But both polls showed Serra falling to break the gentle upward trend he enjoyed in some earlier polls. Vox Populi had him with 17 percent after 21 percent and Datafolha gave him 20 percent after 21 percent on June 7. Serra starts his campaign, which will focus mainly on remote constituencies, in the northeastern Piaui State, said his campaign manager Nizan Guanaes, adding that he was not concerned by Serra's decline. "We are still at the start of the championship and we have to work, Take Serra to the streets."

Soccer terms and comparisons are widely used in campaigning as candidates hope to grab the nation's attention after the World Cup finals, which Brazil won this week.

--------------- Center-Left Candidate Grabs Second Place --------- The polls also showed former finance minister Ciro Gomes, who represents the popular Socialist Party and two other leftist parties, gaining on Serra. In the Vox Populi poll, he rose 2 percentage points to 18 percent, overtaking Serra.

According to Datafolha, Gomes, who advocates increased state intervention in the economy and local debt rescheduling, has jumped 7 percentage points to 18 percent since early June.

In both polls, the gap between Serra and Gomes is smaller than the margin of error, which means a technical draw at the second spot. Markets fell on Friday on rumors of such a situation and traders expected more losses next week.

Gomes' spokesman, Egidio Sersa, told Reuters that although Gomes was gaining in polls, they still could not be seen as a real proof of voting intentions in Brazil, while such polls at this stage only benefited market speculators.

"A very small part of the population knows about candidates or even the election, it was all soccer up to now.

They will learn all that after candidates get free television time on August 20, which is when the real campaign starts," he said.

Gomes describes himself as a center-left social democrat.

Analysts say Gomes' girlfriend of many years, soap opera star Patricia Pillar, is also helping his bid.

Gomes' campaign kicks off on Saturday night in the northeastern Ceara State, where he was governor.

Former Rio de Janeiro state gov. Anthony Garotinho, also from the opposition, edged up to 12 percent from 11 percent according to Vox Populi and lost 3 percentage points to 13 percent according to Datafolha.

Two more candidates have registered with the supreme electoral court, but their ratings are in single digits.

Polls have been the focus of intense market speculation amid fears of mismanagement of Brazil's economy and its debt.

Lula, who has pledged to respect the Cardoso government's main economic policies and honor debt obligations, has recently ceased being investors' only concern. They now also fear the debt burden may be hard to service for any future government.

The premiums investors require to compensate for risk of holding Brazilian bonds are close to the all-time highs.

Gomes' spokesman denied newspaper reports that Gomes had supported Cardoso's idea of hammering out an agreement between key contenders to sign a deal with the International Monetary Fund that would guarantee a quiet transition after the polls.

Serra has backed talks on a deal which would outline inflation and budget surplus targets, among other conditions.

The first round of the elections is on Oct. 6, with runoffs if needed on Oct. 27. The Constitution bars Cardoso from running after two terms in the office.