Defense minister Herve Morin called the report in Brazilian newspaper Folha de S. Paulo "rumors" and vaunted the superiority of the French jet.

"This is an extremely tough competition and in this type of competition everyone spreads a lot of rumors," Morin said in an interview on French radio station RMC.

Sweden's Gripen NG, made by Saab AB, and U.S.-based Boeing Co.'s F-18 Super Hornet are also in the running for the contract. The newspaper said the Rafale finished last in a technical evaluation carried out by Brazil's air force.

The air force's main objection to the Rafale is its price, which is estimated at double the cost of a Gripen fighter, Tuesday's report in Folha de S. Paulo said. The Gripen was preferred because of the greater opportunity provided by the Swedish group to transfer technology to Brazilian engineers, the report said.

Brazil's air force would not confirm the report, saying only that it has completed its technical evaluation of the three jets but has not yet given the report to the Defense Ministry.

Morin defended the Rafale, saying it was like "a Ferrari compared to the Gripen, which is a Volvo."

A final decision on the order for 36 fighters had been expected last year, with the first deliveries set for 2014. So far Brazil has not announced its choice.

Brazilian Foreign Minister Celso Amorim, meeting with Palestinian leaders in Geneva Wednesday, said the final decision will be up to President Luiz Inacio Lula da Silva. He added that the political -- along with military -- importance of the buy will be weighed.

"Of course we'll study and take into consideration the (military's) report," Amorim said, according to the privately run Agencia Estado news service. "But ... it's the president, with the help of his defense council, who will make the final decision. It won't be an exclusively military decision."

France has struggled to find a foreign buyer for the Rafale. Paris has been trying for years to market the planes -- from Saudi Arabia to India and elsewhere -- but has not yet clinched an export deal.

Brazil's Defense Minister Nelson Jobim has expressed a preference for France's Rafale.

Brazil already has agreed to buy five French Scorpene submarines, one of them with nuclear propulsion, and 50 Cougar helicopters for about $12 billion. All would be assembled in Brazil.