US-Brazilian ties have improved dramatically in recent years

But Mr Powell, who is on a two-day visit, urged Brazil to allow the UN's nuclear watchdog greater access to inspect its nuclear technology.

Brazil wants to limit entry to a new uranium enrichment plant, saying it must protect its nuclear technology.

Despite nuclear concerns, Mr Powell's visit is firmly fixed on strengthening co-operation between the US and Brazil.

Global role

Speaking to business leaders in Sao Paulo, Mr Powell said Brazil was an "important candidate" for a permanent seat on an expanded UN Security Council, although he stopped short of directly backing the country's long-held desire for the position.

He praised the growing global role of Brazil, the biggest country in Latin America.

"Brazil is a nation the US values as a close partner in advancing prosperity, democracy, and security, not only in the hemisphere but around the globe," Mr Powell said.

Brazil says it fears industrial espionage at its nuclear plant

Mr Powell also said the US was firmly committed to seeing a pan-American free trade deal, known as the Free Trade Area of the Americas (FTAA), take effect early next year.

Brazil has voiced mixed feelings over the free trade moves, as well as complaining about US agricultural subsidies.

Mr Powell accepted that negotiations had been difficult but he expected progress.

"We hope that we will be able to complete the FTAA in the early part of 2005. That looks more difficult now, but in no way could we move the commitment [President Bush] has," Mr Powell said.

Wrong message

Mr Powell travelled on from Sao Paulo to Brasilia for talks with President Luiz Inacio Lula da Silva and Foreign Minister Celso Amorim.

The secretary of state's visit comes less than two weeks before a team from the International Atomic Energy Agency (IAEA) arrives.

The IAEA wants unimpeded access to the Resende plant in Rio state but Brazil argues visual inspection will result in the disclosure of its technological secrets.

US diplomats have warned that such a stance by Brazil will send the wrong message, at a time when there is concern about the nuclear programmes of Iran and North Korea.