The European Union invited Brazil on Wednesday to join a small group of strategic partners in what President Luiz Inacio Lula da Silva said would revive a historic relationship.

South American powerhouse Brazil would join a group including China, Russia and India which have such agreements with the EU.

The invitation was extended by Portugal to its former colony at the first summit of its rotating, six-month EU presidency.

"What we are doing today is to revive a historic partnership," Lula told Portuguese and Brazilian business leaders before the summit opened.

"It's fundamental that companies create partnerships between the EU and Brazil and the growth potential in trade is huge."

The partnership is meant to improve cooperation between the EU and South America's largest economy in areas like trade, renewable energy and the fight against poverty.

"This summit is a way to acknowledge the growing part that Brazil has played on the world stage and that makes the country an essential partner," Portuguese Prime Minister Jose Socrates said.

Socrates said the upgrading of ties with Brazil would give coherence to EU foreign policy by now including all the so-called BRIC — Brazil, Russia, India and China — leading emerging countries as special partners.

Brussels also sees Brazil — one of the world's biggest emerging economies which is home to most of the Amazon's rainforest and a major biofuels producer — as a key player in the fight against global warming, one of the EU's priorities.

In a sign of Portugal's determination to take advantage of that potential, oil company Galp Energia signed on Wednesday an agreement with Brazil's Petrobras to produce 600,000 tonnes of vegetable oils in Brazil.

Brazil is a world leader in production of biofuels and EU leaders agreed in March to a target for biofuels to represent at least 10 percent of vehicle fuels by 2020.

The summit will also address bilateral trade and investment issues to complement the EU's talks for a trade deal with the Mercosur group of South American countries including Brazil.

These talks are on hold pending an outcome of struggling global trade talks at the World Trade Organisation in the so-called Doha round, in which Brazil has locked horns with the EU and the United States.

"Brazil has shown it is dedicated to the success of Doha," Lula told business leaders. "We're willing to be flexible, as long as the deal, especially on agriculture, meets the concerns we share with Mercosur."

Brazil is the EU's main trading partner in Latin America.

Trade with Brazil totalled around 39 billion euros ($53 billion) in 2005, the EU importing 23 billion euros, mostly agricultural products, and exporting 16 billion, according to the European Commission.

Reuters