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Porto Alegre (Brazil) (AFP)

A polarized Brazil held its breath Wednesday ahead of a court decision which could confirm a corruption conviction against former president Luiz Inacio Lula da Silva and end his hopes of reelection this year.

A three-judge appeals court convened in the tense southern city of Porto Alegre to rule on an appeal by the hugely popular leftist icon against his July corruption conviction in Brazil's sprawling "Car Wash" graft scandal.

The stakes are high and thousands of Lula supporters and opponents have camped out in the city awaiting the ruling.

Police surrounded the district that includes the court, which is in the middle of a park, and helicopters flew overhead.

The court session started with a review of the trial evidence, according to an AFP journalist inside the courtroom.

Lula is accused of being gifted a three-floor seaside apartment from Brazil's OAS construction group in exchange for public contracts from state-controlled oil company Petrobas during his 2003-2010 presidency.

Defense lawyer Cristiano Zanin Martins told the court it was clear OAS owned the apartment and "Lula never got the keys and never spent a night there."

Prosecutor Mauricio Gerum slammed what he called an attempt to "contaminate the trial" through "the perpetuation of a personal political project" -- an obvious reference to Lula who has rallied supporters to his cause.

He was typically defiant at a rally Tuesday night.

"Only one thing will take me off the streets of this country, and it will be the day of my death," Lula told cheering supporters, many wearing the red T-shirts of his Workers' Party (PT).

"Until that moment, I will fight for a more just society. Whatever the outcome of the trial, I will continue fighting for the dignity of the people of this country."

Widely beloved during his two-term presidency from 2003 to 2010, Lula was sentenced in July to nine and a half years behind bars after being convicted of corruption and money laundering in the "Car Wash" scandal.

The court is seen as likely to uphold the conviction, and in doing so, effectively scupper his chances of running in an October presidential election he is favored to win. Lula could appeal but the process could drag on for months.

The Eurasia Group consultancy said the court will probably uphold the conviction "and Lula will probably be disqualified in final decisions by the Supreme Court and the electoral court" but closer to election time.

Lula was joined on the podium by his handpicked successor Dilma Rousseff, who was impeached in 2016 for breaking budget rules.

"I am not going to speak today about my trial or about justice, because I have competent lawyers who have proven my innocence," he said.

"I come here to talk about Brazil," added Lula.

"I have the peace of the innocent, of those who did not commit any crime. Are they afraid of me coming back? They are afraid of the good things we did," he said, referring to his right-wing opponents.

Lula, Rousseff and leftist leaders say they are the victims of a plot by the judicial, political and business sectors to sideline the PT.

- High security -

Authorities in Porto Alegre have mounted a special security operation to keep opponents and supporters of Lula apart over fears of clashes.

Helicopters will overfly the courthouse and even ships are being used to protect the building, located adjacent to a river.

Lula will follow the ruling from his home in Sao Paulo.

Rousseff had earlier denounced what she called the "third stage of the coup" against Lula.

The first, she argued, was her impeachment, the second consisted of the austerity budget introduced by her successor Michel Temer and the third "aiming to destroy the PT and especially our leader."

- Markets alert-

Analysts said the markets were betting on Lula's sentence being confirmed by the court.

"Markets cannot hide their enthusiasm: a ruling against Lula, who has promised to revert part of President Michel Temer's business-friendly reforms, is widely seen as a fatal blow to his presidential bid," said Silvio Cascione in a note from the Eurasia consultancy.

Whatever the verdict, the court decision will constitute a new test for Brazilian democracy.

"If Lula can't run, the election is very uncertain and we would have five or six candidates with the possibility of reaching the second round, which would make the 2018 elections the most unpredictable since the restoration of democracy (in 1985)," political scientist Mauricio Santoro of Rio de Janeiro State University told AFP.

© 2018 AFP