Rice said she had given Zoellick tough assignments that required him to travel often and fill in for her in Washington, "and occasionally even hug a panda." The photo was printed around the world.

Zoellick had been considered for the World Bank post before, when former chief James Wolfensohn left. But Bush gave the job to Wolfowitz.

The Wolfowitz episode threw the bank's staff into a revolt, strained relations with the Europeans and threatened to tarnish the bank's reputation and hobble its ability to fight poverty.

Before taking the helm in 2005, Wolfowitz was the No. 2 official at the Pentagon and played a key role in mapping out the US-led war in Iraq. From the beginning, Europeans and others were upset that Bush would pick someone to run the bank who was so closely associated with the war.

This time around, though, Paulson - who led the search efforts for a Wolfowitz replacement - said he was consulting closely with other countries.

By tradition, the World Bank has been run by an American, while its sister agency the International Monetary Fund is headed by a European. The United States, the bank's biggest financial contributor and largest shareholder wants to keep that going. However, some aid groups and other critics have called for the decades-old practice to be scrapped.

In Brazil, reaction to Zoellick was cryptic, with a government spokeswoman saying: "Today, the Treasury Secretary of the United States called Finance Minister Guido Mantega to tell him the news of President Bush's choice. Minister Mantega immediately informed President Luiz Inacio Lula da Silva. The Brazilian government has acknowledged the decision."

Brazil has said it would like to see the head of the World Bank, selected in "an open and transparent process without restrictions determined by nationality," the spokeswoman said.

The World Bank, created in 1945 to rebuild Europe after World War II, provides more than $20 billion a year for projects such as building dams and roads, bolstering education and fighting disease. One of the bank's main programs offers interest-free loans to impoverished countries.

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