WASHINGTON: Republican presidential candidate John McCain agreed to a debate with his rival Barack Obama even though Congress does not have an economic bailout deal, reversing an earlier decision to delay the forum until Washington had addressed the financial crisis.

With less than 10 hours until the debate was scheduled to start, the McCain campaign announced that the Arizona senator would travel to the University of Mississippi.

'There never was a deal, but I do believe the meeting was important to move the process along. It gave us a renewed sense of urgency and I'm confident we will move forward, and I'm confident that we will reach a conclusion.' Republican presidential candidate John McCain, on bailout negotiations 'Sometimes if you inject presidential politics into some delicate negotiations, it's not necessarily constructive. It's amazing how much people can get done when folks aren't worried about taking the credit or passing the blame.' Democratic presidential candidate Barack Obama, on the negotiations ... more

The campaign said that afterwards, MrMcCain would fly back to Washington to continue working on the economic crisis. The debate was being held this morning Singapore time.

The campaign's statement said Mr McCain was optimistic that there has been progress towards a bipartisan agreement. But earlier in the week, he had said he would delay the debate 'until we have taken action to address this crisis'.

'He is optimistic that there has been significant progress towards a bipartisan agreement now that there is a framework for all parties to be represented in negotiations,' the McCain campaign said in a statement.

The debate was to be the first of three and comes as the candidates are locked in a tight race. Most polls have shown that MrObama, a first-term Democratic senator seeking to become the first black president, tied or had a slight lead over Mr McCain.

This first debate seemed in jeopardy after the Republican return to Washington and the unravelling of progress towards a congressional compromise on the US$700 billion (S$1 trillion) plan to rescue the country's financial sector.

Mr McCain had earlier said he was suspending his campaign so he could focus on solving the financial crisis - a move derided by many Democrats as a political stunt.

A White House summit on Thursday - attended by congressional leaders as well as Democrat Barack Obama and Mr McCain - followed by more talks between members of Congress and Treasury Secretary Henry Paulson, failed to find common ground on the bailout and to further the rescue package.

The session, aimed at showing unity in resolving the financial crisis, broke up with conflicts in plain view. Mr McCain would not commit to supporting a plan worked out by congressional negotiators, said people from both parties who were briefed on the exchange.

Mr McCain's call to postpone the debate had been his latest surprise move aimed at shaking up a race in which MrObama would seem to have an inherent advantage, given the economic turmoil and the unpopular presidency of Republican George W. Bush.

Democratic Senator Chris Dodd, who chairs the Senate Banking Committee, said Mr McCain was grandstanding and trying to reverse his recent slide in the polls. He said the White House meeting, which Mr Bush called at Mr McCain's request, had turned into 'political theatre'.

Mr Obama was more understated in his criticism of Mr McCain's tactics but advocated going ahead with the debate.

'I'm not clear that, in a very difficult situation like this, doing things in the spotlight and injecting presidential politics is necessarily useful,' Mr Obama said after the White House meeting.

Mr McCain's camp issued a statement saying the meeting had 'devolved into a contentious shouting match' and implying Mr Obama was at fault.

This is not the first time a long-odds McCain bet has shifted the race dynamics. A month ago, he curbed Mr Obama's bounce at the polls and quashed talk of the spectacular Democratic convention finale with his shock selection of Alaska Governor Sarah Palin as running mate.

Mr McCain hoped to emerge from this power play with credit for driving the massive bailout plan into law and bringing rival factions together, burnishing his credentials as a maverick and reformer.

But the downside risk was also huge: If he is blamed for scuppering the deal and the stock markets tank, taking the life savings of Americans with them, his presidential bid could be doomed.

Staying away from the debate would have been a huge gamble for Mr McCain - voter response to such a move would be tough to gauge.

ASSOCIATED PRESS, AGENCE FRANCE-PRESSE