U.S. bailout deal stalled

By Tom Ferraro and Richard Cowan

WASHINGTON (Reuters) - A deal to rescue the faltering U.S. financial system stalled on Thursday amid bickering between Democrats and Republicans and accusations of political posturing by Republican presidential candidate John McCain.

U.S. lawmakers had appeared close to a final agreement on Thursday on a massive $700 billion (377 billion pound) bailout to save the financial system, lifting world stock markets and sending the dollar higher. But things spun off course during an emergency White House meeting between Congressional leaders with U.S. President George W. Bush, according to lawmakers.

In advance of that meeting, which included the two men battling to succeed him, Democrat Barack Obama and McCain, a compromise bipartisan deal seemed imminent.

After the session, Congressional leaders said an agreement could take until the weekend, sending U.S. stock futures down, paring earlier gains.

Republican U.S. Sen. Richard Shelby bluntly told reporters, "I don't believe we have an agreement.

A group of conservative Republican lawmakers proposed an alternative mortgage insurance plan, eschewing the Bush administration's Wall Street bailout just weeks before the November 4 election as many lawmakers try to hold on to their seats.

Congressional aides said they were still working on reaching a deal, with many issues remaining.

White House spokeswoman Dana Perino said, "The deal is not finalized ... There's a commitment to get something done, nobody's happy about it."