U.S. presidential debate will proceed

By John Whitesides, Political Correspondent

OXFORD, Mississippi (Reuters) - Republican John McCain ended the suspense and said he will attend the first of three debates with Democrat Barack Obama on Friday, setting up a showdown that could help decide a tight White House race.

McCain had vowed to skip the debate if negotiations were not completed on a $700 billion rescue of the U.S. financial industry but his campaign said in a statement that enough progress had been made to participate in the 9 p.m. EDT (2:00 a.m. British time) debate.

"The McCain campaign is resuming all activities and the senator will travel to the debate this afternoon," the statement said. McCain, an Arizona senator, will head back to Washington after the debate and return to the negotiations.

Obama was on his campaign plane in Washington preparing for the flight to Mississippi when the announcement about McCain was made at midday.

The debate is scheduled to focus on foreign policy and national security, although the turmoil on Wall Street has dominated the campaign trail for nearly two weeks and is almost certain to be discussed.

Both candidates spent Thursday night in Washington and conferred with congressional leaders on Friday morning before bailout negotiations resumed.

White House talks between McCain, Obama and congressional leaders ended in disarray on Thursday with no agreement on a stalled $700 billion bailout plan proposed by the Bush administration.

Both candidates said progress had been made and they were optimistic an accord could be reached, but the two campaigns accused each other of injecting politics into the process.