Officials have said that Brazil is positioning itself to use talks with France on a multibillion-dollar arms deal as a bargaining chip in Latin America's fight for better terms for Mercosur agricultural exports to Europe.

It has been reported that Latin America's Mercosur trading bloc, itself riven by divisions, will face European partners at the May 18 summit of Caribbean, Latin American and European countries in Madrid.

As a founding member of Mercosur, Brazil is spearheading the trade talks, aimed at increasing Mercosur bloc's agriculture exports to Europe, amid strong resistance from European farmers and governments fearful of upsetting their electorates.

It was also noted by the report that the Greek debt crisis has raised concerns in Latin America that Mercosur is headed for worse options than originally anticipated as European governments grapple with a huge financial burden created as a result.

Mercosur can ill afford any backlash from Europe's current difficulties. Although four times the size of the European Union, the Mercosur bloc's 250 million people depend on agricultural exports amid sharp income disparities in the member countries -- Argentina, Brazil, Paraguay and Uruguay.

Brazilian media has reported that undeterred by the European events, Brazil has embarked on a diplomatic drive to use its ongoing negotiations for a potential $6.5 billion arms deal with France as a bargaining chip to secure a better deal for Mercosur.

It was further reported that Brazil and France are in negotiation over a Brazilian air force plan to acquire fighter planes for that price tag but Brazil has also talking with Sweden and the Boeing Co. for competing jets. (With Inputs from Agencies)