RIO DE JANEIRO, March 11 (Reuters) - Brazil's president

on Monday called for state-run oil company Petrobras

to pay smaller dividends and invest more, in remarks recorded

ahead of a meeting with the firm's chief executive, who held out

hope of an extra dividend that was axed last week.

President Luiz Inacio Lula da Silva, in an interview with TV

channel SBT that aired in part before a full evening broadcast,

underscored his conviction that Petrobras should be a motor for

economic growth and job creation over shareholder returns.

Petrobras shares, which dove nearly 11% on Friday after

government-named board members voted against an extraordinary

dividend, erased a meager recovery to fall about 1% after Lula's

remarks were broadcast.

"Petrobras is not just a company that should think about

shareholders who invest in it, Petrobras has to think about

investment and think about the 200 million Brazilians who own

this company," Lula said in the TV interview.

His sentiment clashed with comments from Petrobras CEO Jean

Paul Prates to Reuters on Monday that Lula did not interfere

with the company's dividend decision and that the board may

still approve an extra dividend at an April shareholder meeting.

On Thursday, Prates presented a management proposal to the

board for Petrobras to pay shareholders 50% of the potential

extraordinary dividend under company bylaws, but

government-appointed board members voted to withhold the money.

The move blindsided investors, who expected an extraordinary

dividend of $3 billion or more in addition to a routine payout

of 14.2 billion reais ($2.9 billion) announced on Thursday.

Prates was in a meeting with Lula on Monday to discuss the

matter when SBT first shared parts of the president's remarks.

Before the meeting, Prates said he was not planning to leave

his role over the issue.