The strongest warning for Latin America's biggest economy, still seen as one of the most attractive of the emerging markets, came from the Organization for Economic Cooperation and Development.

"There's... a danger of asset bubbles in places like Brazil or places like India and we should be careful about that -- that is a real threat," OECD chief Angel Gurria told CNBC television last Thursday.

His words came as investors appeared to also start to realize the risk, pulling more than 500 million dollars out of the Sao Paulo stockmarket in January.

The Bovespa index slumped 4.7 percent over the month -- a significant turnaround for a bourse that had been strongly rising on the recovery in the global economic downturn.

The currency, the real, also suffered.

It is now at its lowest point against the dollar since September 2, 2009 after a nine-day losing streak that has reduced its value to 1.885 reals to the greenback. The decline undercut some of the gains made last year, when the real rose a stunning 33 percent against the dollar.

Brazil's government is unconcerned at the sudden reverse.

"We're not worried with this because we have big (dollar) reserves," Finance Minister Guido Mantega said Friday, according to the wesbite of newspaper O Globo. "With a devaluation of the real, exports become more competitive."

His ministry is forecasting economic growth of 5.2 percent in Brazil this year after effectively zero percent growth last year, with consumers and exports driving renewed expansion.

Some of the tensions seen in Brazil's investment climate stem from changes in China, its biggest trading partner with exchanges of 42 billion dollars last year.

Beijing's steps to tighten monetary policy to cool a red-hot economy and prevent property and stockmarket bubbles exploding have raised fears that the global recovery could be derailed.

Such a scenario would immediately affect Brazil's exports, particularly its metals and agricultural products.

The net effect globally has been a rush back to the "safe haven" dollar, weakening other currencies.

The Brazil-China economic relationship, a new bid to resurrect moribund world trade talks, and the need for Brazil to project an image of an emerging economy success story and 2016 Olympic Games host have all taken on extra importance this year because of October elections.

Leftwing President Luiz Inacio Lula da Silva, who has ruled over impressive economic growth since coming to power in 2003, is to leave office at the end of the year, on completion of his maximum two-term limit.

Before that, though, in April, Lula may host a visit by Chinese President Hu Jintao to discuss these and other issues, according to the Estado news agency.

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