Brazil's president has vowed to tackle corruption and improve the country's sluggish economy as she was sworn into her second term.

Dilma Rousseff promised to embark on an anti-corruption crusade on Thursday in response to a multibillion-dollar fraud scandal engulfing state-run oil company Petrobras.

Rousseff, who became the country's first female president in 2011, took 51.6 percent of the vote in a runoff election in October against business favourite Aecio Neves.

"We are going to rigorously investigate everything that has happened," the 67-year-old leftist pledged at the oath of office ceremony in Brasilia, attended by 13 heads of state as well as the US and Chinese vice presidents.

Dilma Rousseff: Transforming Brazil

"We must investigate and punish, but without weakening Petrobras or diminishing its importance," she added, drawing warm applause from the crowd at the ceremony.

Rousseff, who was chairwoman of Petrobras when much of the fraud took place, has denied knowledge of the corruption.

So far only 39 people have been arrested in the scandal.

'Kickbacks'

The Petrobras scandal, and the ongoing police investigation, erupted just a few months before Rousseff's hard-fought October victory.

In February, the Supreme Court is expected to reveal the names of dozens of politicians who allegedly received funds from more than $3bn in kickbacks.

For her second term, Rousseff has appointed a new minister tasked with breathing new life into the economy, pro-market economist Joaquim Levy, who has already drawn up plans to make public purse savings.

In her speech, Rousseff also promised that Brazil would "return to the path of growth" with the "least sacrifice possible for the population, especially the most needy".

The world's seventh-biggest economy boomed for a time under her predecessor, Luiz Inacio Lula da Silva, before suffering from a decline in Chinese-led demand for commodities just as Rousseff took over.

Extensive social welfare programmes, put in place by Silva, have won her political party support from the poor and lower middle classes.

Source: Agencies