The French President and his Brazilian counterpart watched Brazil's Independence Day celebrations yesterday.

Brazil has entered into final negotiations with France to buy 36 Rafale fighter jets. The deal is being finalized during a visit by French President Nicolas Sarkozy.

In exchange France has agreed to buy around a dozen KC-390 military cargo planes, a future jet-powered transport plane to be built by Brazil's Embraer. A source in Sarkozy's office said the Rafale contract would be worth from 4.5 to 5 billion euros.

France, seeking its first overseas buyer for the Rafale, has been competing against the United States and Sweden to sell 36 planes to help renew Brazil's air force.

Any deal would mark a breakthrough for Sarkozy after years of fruitless efforts by his predecessor to sell the Rafale warplane.

The United States embarrassed France in 2007 when it wrestled a potential deal to sell warplanes to Morocco away from the Rafale in favour of the Lockheed Martin F-16 jet.
   
After meeting with Lula along with his Finance Minister Christine Lagarde, Sarkozy says he intends to buy Brazilian planes to substitute their obsolete American jets.

Critics say the Rafale's reported price tag of some $78 million makes it too expensive, but French executives stress it has low operating costs and is agile in combat.

France hopes that securing a win for the Rafale will boost its chances as the global market for fighter planes heats up.