Investors keenly await remarks from incoming Brazil finance minister

Investors eagerly await Levy's first comments to see whether the respected Bradesco executive will introduce more business-friendly policies in Rousseff's second term.

The government also announced the appointment of former Deputy Finance Minister Nelson Barbosa as Rousseff's new planning minister in charge of the budget in a statement on Thursday, while central bank chief Alexandre Tombini was reappointed to his post.

Levy, Barbosa and Tombini will hold a joint news conference at around 4 p.m. (1800 GMT), according to a government statement. The nomination of Levy and Barbosa was widely expected, but the statement did not say when both will take over their new jobs.

Rousseff's new presidential term starts on Jan 1.

Known as a fiscal hawk, Levy's most urgent challenge will be to stanch the bleeding of government accounts that threaten Brazil's coveted investment grade credit rating in coming years.

Levy was instrumental in helping Brazil obtain that credit rating when he was the head of the Treasury between 2003 and 2006 and few know Brazil's public finances like he.

However, his success will depend on how much freedom newly reelected Rousseff gives him to dictate policy.

A tough manager who likes to make even the smallest of financial decisions, Rousseff clashed with Levy in 2005 when as chief of staff of then-President Luiz Inacio Lula da Silva she called his fiscal adjustment plan "rudimentary."

A market rally after local media first reported his appointment suggests that investors are betting Levy will succeed in pushing through some of the painful fiscal adjustments needed to recoup confidence in Brazil.

"We see the decision to nominate Levy as a political signal for a faster and deeper adjustment," Nomura Securities analyst Tony Volpon said in a note to clients on Wednesday.

Brazil's benchmark Bovespa index opened 0.50 percent higher on Thursday while the real weakened slightly in a day of expected low liquidity due to Thanksgiving in the United States.

A paper written by Levy and several other economists in August calls for the next president to meet fiscal targets without "tricks," openly criticizing Rousseff's use of alternative accounting methods to bolster savings.

The essay also calls on the next administration to seek a free-floating exchange rate and bring inflation back to the center of the official target, two factors that many economists say are crucial for Brazil to recover solid growth.

(Reporting by Alonso Soto; Editing by Cynthia Osterman and W Simon)