He also visited Brazil's famed City of God slum as the biggest military intervention in the Arab world since the Iraq invasion entered its second day.
The President's wife Michelle and daughters joined him on the five-day visit to Latin America prompting the trip to be branded a 'vacation' by right-wingers.
© The Associated PressPresident Barack Obama with first lady Michelle Obama and daughters Malia and Sasha spent their final night in Brazil touring the Christ the Redeemer Statue in Rio de Janeiro
Republican Newt Gingrich has mocked Mr Obama for his lack of leadership over Libya by publicising his final four March Madness picks as rebels battled for their country.
During his sightseeing tour of the slum, Obama kicked a soccer ball with pint-sized boys and swayed to the beat of a samba performance at a makeshift community centre.
Residents crowded sidewalks, rooftops and balconies to wave as Obama's shining black SUV rolled through the narrow streets.
© ReutersWelcome: Excited Brazilians watch as President Obama's SUV arrives in Rio's City of God slum during his two-day trip to the country
© ReutersOn the ball: The president shows off his skills as he plays soccer with children
At a community centre, the president shed his coat and tie, rolled up his sleeves and dribbled a soccer ball one-on-one with a delighted boy.
Michelle Obama and daughters Sasha and Malia also kicked a ball around with the kids.
Mr Obama then walked out to the street and waved to throngs of cheering residents.
© The Associated PressSamba time: Mr Obama sways and mimics the dance moves of the children who put on a performance for him
The White House has justified the tour as an opportunity for boosting U.S. exports and to help create American jobs, which are both considered key to his 2012 re-election chances.
Today Mr Obama praised Brazil's transition from dictatorship to democracy as a model for the Arab world.
The president spoke from a theatre in a historic Rio square where a 1984 protest set the stage for the eventual end of a 21-year military dictatorship.
He said those protesters showed how a popular revolt could produce a thriving democracy.
© AFP / Getty ImagesMy hero: Two young Brazilian boys give the President a hug during a performance as he toured the slum
© ReutersHigh-five: First Lady Michelle Obama is greeted by a young Brazilian boy as her daughters watch the show
He said:'We've seen the people of Libya take a courageous stand against a regime determined to brutalize its own citizens.
'Across the region, we have seen young people rise up - a new generation demanding the right to determine their own future.
'From the beginning, we have made clear that the change they seek must be driven by their own people.
'But as two nations who have struggled over many generations to perfect our own democracies, the United States and Brazil know that the future of the Arab World will be determined by its people.
© ReutersMatch winner: President Obama and his family pose with the children who played street soccer with them
With crises rocking the Middle East and pushing up oil prices, the U.S. is taking a keen interest in the deep-sea oil reserves that Brazil is starting to tap off the Rio coast.
In keeping with his 'no-drama Obama' image, the White House wants to avoid any sense the president is being held hostage by events or unable to tend to other crucial business.
U.S. and Brazilian officials and business leaders are due to hold meetings today to discuss investment opportunities around the oil development and an expected infrastructure boom arising from Rio's hosting of the Olympics.
© Xinhua/PhotoshotClose: President Obama and Brazil's leader Dilma Rousseff after their meeting in Brasilia
© ReutersOn tour: President Obama arrives in Rio with his wife Michelle and their daughter Malia, bottom right, and Sasha
Rubber bullets were fired at the crowd after a Molotov cocktail was thrown through the consulate doors, it was reported.
The president ended his stay in Rio with a night-time walking tour of Corcovado Mountain to the Christ the Redeemer Statue. Tomorrow he flies to Chile and ends his tour on Wednesday in El Salvador.
Secretary of State Hillary Clinton has defended the president's trip, saying it was important to focus on all parts of the globe.
In Chile today, Obama will meet with President Sebastian Pinera. The two leaders will also conduct a brief news conference at La Moneda Palace in Santiago.
Obama also gives a speech later today on U.S.-Latin American cooperation. Tonight, he and first lady Michelle Obama will attend an official dinner hosted by President Pinera.
There are also anti-U.S. protesters in Chile.
Of the plume of Fukushima radiation ~ 270 CPM over Las Vegas thru Denver over the weekend (for HIM and his girls!), as well as to recoup His pressing for drill, Barry, DRILL in his re-slicked Crudubility GULF!