BRASILIA, Brazil -- Brazil's government and markets rejoiced on Thursday over a record $30 billion IMF loan that boosted global optimism that the country can smoothly ride out turbulent presidential elections.

Markets from New York to Europe rallied after the International Monetary Fund came to the rescue of Latin America's largest economy, which has struggled for months to restore eroding investor confidence ahead of October elections which the leftist opposition has strong chances of winning, Reuters reported.

Brazil's currency, the real, plunged to record lows late last month, stocks fell and bond spreads spiraled as investors feared the hard-won economic stability of President Fernando Henrique Cardoso's government was under threat.

But with the IMF credit, which was much larger than expected, investors took the view that Brazil is now safe from turning into another Argentina, Brazil's southern neighbor which is in the grip of its worst economic crisis in memory.

"This is going to give markets what they need to recover and make a safe transition to a new government," said Roberto Dantas, an economist at Banco Schahin, a Sao Paulo brokerage.

The real closed 3.8 percent higher at 2.91 per dollar, after reaching 3.605 on July 31. stocks ended 4.5 percent higher and Brazil's foreign bonds rose 5.5 percent. "With this international aid, the next president will have a base, a support to consolidate his program and policies, and calm down investors, savers, citizens and society," Central Bank President Arminio Fraga told investors in a videoconference. "With this the economy will grow."

??????Cardoso Legacy at Stake?????? Cardoso's low inflation policies, mass privatization and controlled public spending helped make Brazil the second largest recipient of foreign direct investment in the emerging market universe in recent years. "This is not just a vote of confidence in the government but in the country, which has the ability to fulfill its commitments," Cardoso said.

Concerns that Cardoso's achievements could be undone by the incoming president have been a driving force behind investor worries and helped explain why many analysts were still reluctant to sound the all-clear on Brazil's economic health.

"There is uncertainty because these politicians don't have a track record and that is still a risk that continues," said Siobhan Manning, a Latin American debt strategist at the Italian investment bank Caboto.

Credit rating agency Standard & Poor's said on Thursday it retained a negative outlook on Brazil's ratings despite the IMF loan, saying doubts about the economy linger.

Still, the deal won supportive comments from rich nations. In a statement on behalf of the Group of Seven leading industrialized nations, Canada's Finance Minister John Manley said the G7 welcomed the agreement, adding it "should help restore market confidence."

Investors' central concern has been that the next president would be unable to handle brazil's $250 billion public debt, the cost of which has soared as the currency has slumped.

But IMF First Deputy Managing Director Anne Krueger said Brazil's debt is sustainable and there were big differences between Brazil and Argentina. Argentina's debt default led some investors to believe Brazil could go the same way.

"There are a number of issues in Argentina which simply are not there in Brazil," Krueger said in Geneva.

A major reason why markets have worried about the debt burden -- which represents just under 60 percent of economic output -- is that leading left-wing presidential candidate Luiz Inacio Lula da Silva in the past had espoused renegotiating the terms of Brazil's public debt and frowned on IMF policies.