By Alonso Soto
BRASILIA (Reuters) - The president of Brazil's Senate refused on Tuesday to accept a Supreme Court injunction removing him from office, pushing the country toward a constitutional crisis as it struggles to end political gridlock and an economic recession.
A judge on the top court on Monday ordered the removal of Calheiros because he was indicted last week for embezzlement, deepening conflict between the judiciary and the legislature over the prosecution of corrupt politicians.
But following a three-hour meeting on Tuesday, the leaders of Brazil's Senate published a letter refusing to enact the dismissal of Calheiros until the Supreme Court's plenary rules on it Wednesday.
Emerging from the meeting, Calheiros told reporters he would continue in the post and criticized the attempt to remove him just nine days before his mandate officially ends.
"Democracy, even in Brazil, doesn't deserve this," Calheiros said.
The constitutional rift threatens to delay key measures in President Michel Temer's efforts to restore fiscal discipline to Brazil in the midst of a two-year recession.
Brazilian markets seesawed over the decision to oust Calheiros because he would be replaced by leftist Senator Jorge Viana of the Workers Party, which opposes cuts in federal spending.
At stake is the final vote in the Senate scheduled for Dec. 13 of a 20-year constitutional cap on federal spending that is the centerpiece of Temer's plan to bring a widening budget deficit under control in Latin America's largest nation.
In a year of political turmoil in Brazil, Calheiros' ouster due to the embezzlement trial before the Supreme Court followed the removal of the former speaker of the lower house and the impeachment of former President Dilma Rousseff.
The Senate lodged an appeal with the Supreme Court on Tuesday to quickly overturn the injunction that removed Calheiros to avoid disrupting the voting on measures of vital importance to the nation, such as the spending ceiling.
"The injunction causes enormous damage to the already weakened institutional and political balance of the Republic," the document said.
However, the full court is expected on Wednesday to uphold the injunction based on a recent ruling favored by a majority of the court that no one indicted for a crime can be in the presidential line of succession. The head of the Senate is the second in line after the speaker of the lower house, as Brazil does not have a vice president at the moment.
Brazil's currency BRBY fell as much as 1 percent in early trading, but later pared loses.
The benchmark Bovespa stock index .BVSP fell 0.5 percent. The index reversed and climbed 2.17 percent after the Senate refusal was announced.
(Additional reporting by Pedro Fonseca in Rio de Janeiro and Bruno Federowski in Sao Paulo; Writing by Brad Haynes and Anthony Boadle; Editing by Meredith Mazzilli and Alistair Bell)