By Anthony Boadle and Lisandra Paraguassu
BRASILIA (Reuters) - Brazil President Jair Bolsonaro on Friday called for minimum retirement ages significantly lower than those proposed by his predecessor, sparking concerns among investors that he will back watered down pension reform legislation.
The newly inaugurated leader also said he is concerned that the latest proposal for the sale of 80 percent of Embraer's commercial aviation business to Boeing could ultimately lead to the U.S. planemaker owning all of the new venture. It was the strongest expression of concern so far by his government over the tie-up.
Embraer shares were down 1.74 percent in afternoon trading.
On pension reform, Bolsonaro told reporters at an Air Force event that the minimum retirement age would be 62 for men and 57 for women, effective five years after any legislation is passed.
That is lower than the minimums of 65 years of age for men and 62 for women that were proposed by ex-president Michel Temer.
A reform of Brazil's bloated pension system will be among Bolsonaro's biggest challenges, since he has yet to build a base in Congress. It is key to erasing the country's 130 billion reais ($34.76 billion) public deficit for 2019.
Investors on Friday sent interest rates higher on futures markets, showing disappointment about the lower-than-expected minimum age. The head of one major foreign bank's treasury desk saying that "it was not expected by the market and its unambitious, to say the least."
On Friday, Justice Minister Sergio Moro ordered elite federal police to the northeastern state of Ceara, where suspected drug gang members have carried out dozens of attacks against banks and police barracks, and torched several buses. No deaths of bystanders have been reported.
Gangs across Brazil typically carry out such actions to spread fear and in response to police crackdowns on the streets or in prisons. Ceara state officials in recent days have said they would start sending prisoners to whatever jails had space, and not separate those incarcerated according to gang affiliation. Critics blasted the proposal, saying that it will result in immediate and bloody prison uprisings.
Earlier Friday, Bolsonaro stressed his desire for the quick passage of a bill to protect security officials and measures to open up competition in the banking sector.
The far-right president, elected on a law-and-order platform, warned in a tweet that sky-high violence would only slow if laws were passed to provide police and soldiers freedom from prosecution when on active duty.
"The legislative, executive and judicial powers have to make this commitment urgently," he tweeted.
Throughout the campaign, Bolsonaro said he wanted to give police and soldiers peace of mind while on often-violent operations, and he has also advocated broader access to guns so people can defend themselves.
Critics argue those ideas only risk inflaming Brazil's violent streets and worsening Brazil's murder tally, nearly 64,000 people in 2017, a record.
Since his inauguration on Tuesday, Bolsonaro has used executive orders to open up Brazil's economy, crack down on violent drug gangs and redraw the country's foreign policy while pushing conservative social measures.
CENTRAL BANK POWER
The fast pace continued on Friday, with current central bank Governor Ilan Goldfajn telling newspaper Valor Economico that Bolsonaro is likely to empower the central bank to approve the entrance of new foreign lenders into Brazil.
The move could foster competition in a highly concentrated banking system, in which the five largest banks hold 85 percent of total assets. Currently, foreign banks need a presidential decree to operate in Brazil.
Separately, newspaper Folha de S. Paulo reported Bolsonaro is considering a higher tax on personal loans as a way to fund development projects in Brazil's poor north and northeast.
A presidential decree is likely to be issued in the coming days, the paper reported. This measure may displease Brazilian bankers, who favour lower taxation as a way to reduce interest rates for consumers.
In a TV interview on Thursday, Bolsonaro said he would be open to the possibility of the United States operating a military base in Brazil, a sharp shift in foreign policy.
Bolsonaro, a 63-year-old former Army captain and admirer of Brazil's military dictatorship of 1964 to 1985 and U.S. President Donald Trump, has quickly deepened ties with the Unites States and Israel.
($1 = 3.7398 reais)
(Reporting by Anthony Boadle and Lisandra Paraguassu in Brasilia; Additional reporting by Gabriel Stargardter in Rio de Janeiro and Carolina Mandl and Brad Brooks in Sao Paulo; Writing by Brad Brooks; Editing by Steve Orlofsky)