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(Corrects to say the Folha report did not cite a source, not that it cited sources at the presidential palace, updates share price)
RIO DE JANEIRO, Feb 3 (Reuters) - Brazilian President Dilma Rousseff has decided to replace Maria das Graças Foster as chief executive officer of embattled state-run oil company Petroleo Brasileiro SA, the Folha de S. Paulo newspaper reported without saying how it obtained the information.
Preferred shares of Petrobras, as the company is commonly known, extended gains to rise more than 7 percent in late-morning trading in Sao Paulo after the report was published. (Reporting by Jeb Blount, Editing by Franklin Paul)