Senior Brazil legislator - Can't let feud hurt economy

By Rodrigo Viga Gaier and Jeferson Ribeiro

RIO DE JANEIRO/BRASILIA (Reuters) - A leader of Brazil's Congress vowed on Monday not to let his party's feud with President Dilma Rousseff damage the economy or cause the country to lose its investment grade credit rating.

The comments, by Eduardo Cunha, speaker of the Chamber of Deputies and a senior figure in the PMDB Party, came as Brazilian financial markets continued their recent slide, with the real weakening for a sixth straight session.

Investors are worried ratings agencies could downgrade Brazil to non-investment grade territory unless Rousseff successfully pushes through an austerity plan, a task made more difficult by a shrinking economy and her own falling popularity.

The PMDB is the largest party in Rousseff's coalition, but its leaders have in recent days effectively sabotaged some of her measures, including a planned increase in payroll taxes.

Some PMDB leaders including Cunha are upset over being included in an investigation of corruption at state oil company Petroleo Brasileiro SA .

Cunha reiterated his displeasure with the investigation on Monday but also said the party was mindful of the need to "send a message of tranquility to investors and the market."

"If we don't do this, we're going to be deepening the economic crisis," he told reporters. "We have to avoid that Brazil lose investments, (its) investment grade."

It is unclear whether other members of the PMDB, a large and unwieldy party with no unifying ideology, will take a similar tack in coming weeks. Some congressional aides have said they expect tensions to get worse as the Petrobras probe continues.

Rousseff, speaking separately on Monday, said she expects the economy to begin showing growth again by the end of 2015 once the budget "adjustment" restores confidence.

Investors have their doubts. Brazil's currency has shed more than 17 percent of its value this year, and economists now expect the economy to shrink 0.66 percent in 2015 - which would be its worst performance in a quarter of a century.

Rousseff defended the budget cuts in a major televised address on Sunday night, but her speech met with protests in more than a dozen major cities.

Her chief of staff, Aloizio Mercadante, played down the unrest in comments to reporters on Monday, comparing making budget cuts to "going to the dentist - nobody wants to but ... every so often you have to go."

(Reporting by Jeferson Ribeiro, Anthony Boadle and Rodrigo Viga Gaier; Writing by Brian Winter; Editing by Steve Orlofsky)