Brazil's House Speaker Splits With Government

Brazil's political crisis deepened Friday as the powerful speaker of the house announced that he is withdrawing his support for the government of President Dilma Rousseff amid a spiraling corruption scandal at Petró leo Brasileiro SA.

Eduardo Cunha, a member of Brazil's largest political party, the PMDB, accused the administration of pressuring prosecutors to implicate him in the vast bid-rigging-and-bribery scheme. Late Thursday, the federal judge leading the investigation broadcast testimony from a defendant who turned state's evidence alleging that Mr. Cunha took $5 million in bribes. Mr. Cunha has denied the allegations.

"The government hates me," Mr. Cunha said. "Starting today, I consider myself in a personal breakup with the government."

The split worsens a toxic political environment that is proving damaging to Latin America's largest economy and holds huge political risks for Ms. Rousseff. The president has seen her approval ratings sink to record lows and she is facing rising calls for her impeachment at the hands of a rebellious Congress.

A spokeswoman for Ms. Rousseff's office declined to comment.

At the large boulevard in front of Congress in the country's capital, signs called for "military intervention."

"We have a real crisis in Brazil," said Carlos Melo, political analyst at Insper, a Sã o Paulo business school. "We do not know where this process will lead us."

Brazil's currency, the real, weakened sharply on Friday and the Ibovespa stock index was down more than 1% in early trading.

A longtime critic of the administration, Mr. Cunha has led a backlash against austerity measures pushed by Ms. Rousseff's government, which is trying to stave off a threatened downgrade of Brazil's sovereign credit rating. He has also indicated that he will open the door for a possible impeachment process against Ms. Rousseff related to alleged irregularities in the government's accounting. Ms. Rousseff has denied any wrongdoing.

Mr. Cunha is an influential member of the Brazilian Democratic Movement Party, or PMDB, and a longtime ally to Ms. Rousseff's Workers' Party, or PT. It is unclear whether PMDB will break up the ruling coalition or if Mr. Cunha's decision will instead cause an internal split in the party.

Rogerio Jelmayer contributed to this article.

Write to Paulo Trevisani at [e-mail] and Luciana Magalhaes at [e-mail]

Access Investor Kit for Petróleo Brasileiro SA

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=BRPETRACNOR9

Access Investor Kit for Petróleo Brasileiro SA

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=BRPETRACNPR6

Access Investor Kit for Dominion Resources, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US25746U1097

Access Investor Kit for Petróleo Brasileiro SA

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US71654V4086

Subscribe to WSJ: http://online.wsj.com?mod=djnwires