RIO DE JANEIRO, Brazil (AP) _ Brazil's president said Sunday that Mercosur _ South America's largest trade bloc _ is heading toward the adoption of a euro-style single currency.

Fernando Henrique Cardoso made his remarks in a speech during the formal opening of Mercosur Economic Summit, an annual event sponsored by the World Economic Forum.

He said Mercosur was advancing toward ``macroeconomic convergence ... (leading) to a monetary union, which we would like to see implemented in the medium term.''

Created in 1991, Mercosur is a customs union comprising Argentina, Brazil, Paraguay and Uruguay as full members and Bolivia and Chile as associates. Today, it represents a market with a combined gross domestic product of more than $1 trillion and a consumer market made up of the region's 200 million people.

Nearly 100 business and political leaders converged on this city to attend the summit which will focus on Latin America's economic integration and competitiveness on the world market.

Cardoso told those assembled that before a single currency could become reality, the countries of the region would need to enact fiscal policies ``that guarantee the solvency of our accounts and monetary policies that guarantee price stability.''

Mercosur and other regional blocs like the Andean Community were stepping stones for the eventual formation of the U.S.-sponsored Free Trade Area of the Americas, Cardoso said.

He also said Mercosur would continue negotiating with the European Union for the creation of a trans-Atlantic free trade zone.

The summit will also focus on the region's competitiveness and ways to strengthen it through greater investment in education, infrastructure and technology.

Other topics on the agenda include the environment, business-to-business commerce via the Internet and biotechnology.