By Anthony Boadle
BRASILIA (Reuters) - Opposition candidate Aecio Neves is heading into the final week of Brazil's presidential race with a razor-thin lead in polls, but it's the incumbent Dilma Rousseff who appears to be gaining momentum in the homestretch.
After a sudden surge before and after the first-round vote on Oct. 5, Neves is struggling to retain the momentum that gave him a slight advantage in recent polling.
He leads Rousseff by 2 percentage points in the most closely watched opinion polls, within their margin of error.
Recent surveys show that support may have peaked for Neves, an investor favorite, and his disapproval numbers are rising amid a barrage of attacks by the Rousseff campaign.
The number of Brazilians who say they would never vote for Neves rose 4 percentage points this week to 38 percent, according to a survey by the Datafolha polling firm. Rousseff's rejection rate came down one point to 42 percent in the same poll, which also showed her approval rating on the rise.
The tight race has turned ugly with the candidates swapping accusations of corruption and economic mismanagement as they scramble to sway the 6 percent of voters that remain undecided and others not firmly committed.
In a testy television debate on Thursday night, Rousseff alluded to a 2011 incident in which Neves was pulled over and refused a breathalyzer test. Neves, who has managed to play down a reputation as a party-loving playboy, acknowledged the incident and said he regretted it.
Rousseff has also questioned Neves' achievements as governor of Minas Gerais state and accused him of nepotism, putting him on the defensive as the campaign enters its final week.
"Our strategy is working. Our tracking polls show Dilma is slightly ahead now," Workers' Party president Rui Falcao told Reuters.
Neves is expected to step up his attacks on Rousseff in the final two debates as he tries to link her with a festering corruption scandal involving state-run oil company Petrobras.
A jailed Petrobras executive appointed in 2004 during Rousseff's seven-year stint as chairwoman of Petrobras's board alleged in statements to police investigators obtained by local media that bribes funneled through the company were used to fund the Workers' Party and its key allies in Congress, and might even have been used in her 2010 presidential campaign.
"There are only two possibilities: either you were an accomplice or you were incompetent in managing the country's largest company," Neves told Rousseff in Thursday's debate.
Rousseff has dismissed the allegations as unfounded. She said the leaks were timed to harm her re-election bid.
So far the allegations have apparently had little impact as voters are generally more concerned with rising crime and poor public services.
NEW MIDDLE CLASS
Rousseff's more aggressive campaign strategy aimed at exploiting Neves' weaknesses has helped deflect attention away from recent bad news on the economic front, including falling industrial output and a threatened credit downgrade.
While investors and some business leaders blame Rousseff's heavy-handed industrial policies for pushing Brazil into recession this year, unemployment is near record lows and many of Brazil's poor credit her Workers' Party.
Rousseff and Neves are fighting for the support of one key demographic - the millions of Brazilian who were lifted from poverty during 12 years of Workers' Party rule but are now demanding better public services.
Voters who call themselves undecided are predominantly female and less well educated, and will tend to cast their ballots for Rousseff, said Mauro Paulino, Datafolha's director.
But he said other voters can still be swayed one way or the other, especially young Brazilians with access to education that their parents could only dream of.
Frustrations with the political status quo drove many of those young voters into the streets last year in protests that swept major cities, and they found a sympathetic candidate in environmentalist Marina Silva.
After Silva's first-round elimination, she endorsed Neves, but some of her supporters have resisted backing a politician they view as traditional and conservative.
"This election is totally unpredictable and so the debates will be decisive," said Paulino. "That's why Thursday night's debate was so fiery."
The most important debate will be on Brazil's largest network TV Globo on Oct. 24, less than 48 hours before voting booths open.
"It will be a face-to-face clash with the whole nation watching," said Thiago de Aragao, partner at Arko Advice, a political analysis firm in Brasilia. "It's going to be very ugly. There will be more attacks than policy proposals."
(Additional reporting by Eduardo Simoes in Sao Paulo; Editing by Kieran Murray)