By Alonso Soto
BRASILIA (Reuters) - Brazilian President Dilma Rousseff will name respected banker Joaquim Levy as her new finance minister, two leading newspapers reported on Friday, singling a shift toward more market-friendly policies that could breathe life into a stagnant economy.
Levy's appointment was reported by Folha de S.Paulo and Estado de S.Paulo, who cited unnamed sources. Reuters was not immediately able to confirm the decision, and a statement from Rousseff's office said the names of new ministers would not be announced on Friday.
Levy, head of the asset management arm of local bank Bradesco SA and a government treasury secretary for the last decade, emerged as a possible candidate for the job Thursday after Bradesco's chief executive reportedly turned it down.
The University of Chicago-trained economist is a proven fiscal hawk who helped Brazil obtain its investment grade credit rating while he was in government by checking spending and overhauling its debt structure.
Many investors hope Levy will be able to pull off a similar coup this time, if his appointment is confirmed. They say hefty budget cuts are necessary to restore confidence in an economy stuck in its fourth year of stagnant growth under Rousseff's leftist rule.
It remains to be seen to what extent Rousseff - also a trained economist, who relishes making even small financial decisions - will loosen her grip on the economy after recently winning a second term in last month's election.
But markets are still likely to embrace Levy, and they extended gains on Friday after the reports.
"By choosing Levy (Rousseff) is trying to regain credibility, which is crucial in this game," said Alberto Ramos, a Goldman Sachs economist who knew Levy at the University of Chicago and later at the International Monetary Fund.
"It is important to have that voice of reason in the team, but at the end of the day it continues to be Dilma Rousseff's government," Ramos said.
Current Finance Minister Guido Mantega, whose credibility suffered in recent years as his often-rosy forecasts have failed to come true, is expected to leave office when Rousseff's second term starts on Jan. 1.
(Editing by Brian Winter and Bernadette Baum)
