OREANDA-NEWS. February 09, 2015. Shares of Brazil's state-run Petrobras fell sharply on Friday, weighing heavily on the benchmark Bovespa stock market index, as investors were disappointed by reports that Banco do Brasil's chief executive Aldemir Bendine was chosen to head the embattled oil company.

Hit by a corruption scandal that has forced its CEO and five other senior executives to resign, Petrobras has increasingly lost the confidence of investors and has been unable to tap international capital markets since it delayed the release of its audited third-quarter earnings after a corruption scandal broke.

Investors hoped President Dilma Rousseff would appoint a star executive from the private sector to turn around the company, which has been involved in a scheme that allegedly funneled kickback payments from contractors to the ruling Workers' Party and its allies in Congress.

Instead, Rousseff picked a confidant from a state-run bank who recently supported a government strategy to lower interest rates to consumers, forcing private banks to do the same.

"Bendine is very identified with Rousseff's first term," said Alvaro Bandeira, partner at Orama Investimentos in Rio de Janeiro. "What Petrobras needs is someone with greater independence, ready to challenge the government in some situations."

Rousseff on Jan. 1 began a second four-year term in office, promising to rein in government spending to curb inflation and embark on an anti-corruption crusade in response to the Petrobras scandal.

In Friday trade, preferred shares of Petroleo Brasileiro SA , as the oil firm is formally known, fell around 7 percent, driving the Bovespa index 1.6 percent lower.

Nearly all stocks comprising the Bovespa index were in the red as investors' feared the economic fallout of the Petrobras' scandal, as well as higher interest rates in the United States.

Supporting the view that the US Federal Reserve could soon start raising rates was a strong jobs report that suggested the US economy remains on solid footing.

Fears of higher US rates also weighed on most Latin American currencies, with the Mexican peso weakening 0.3 percent. The Brazilian real slumped 1.3 percent, however, underperforming all regional currencies.