Democratic presidential candidate Barack Obama, left, makes a point Friday as he looks at Republican presidential nominee John McCain during the first U.S. presidential debate, moderated by Jim Lehrer, centre. ((Chip Somodevilla/Associated Press))

Contenders for the U.S. presidency went head-to-head Friday night in a highly anticipated debate that took the U.S. financial-sector meltdown as a first and lengthy topic, with both men agreeing that Congress must act fast to stave off a bigger crisis.

Democratic candidate Barack Obama and his Republican rival, John McCain, took the stage at the University of Mississippi as their fellow members of Congress continued to work toward an agreement on the proposed $700-billion US financial bailout plan for Wall Street.

As determined by a coin toss, Obama went first and offered his support for the proposed government intervention, saying that although the language is not yet precise, "constructive work is being done."

"We have to move swiftly and we have to move wisely," the Illinois senator said.

When asked by debate moderator Jim Lehrer if he would vote for the plan, McCain indicated he would.

"I hope so. ... sure," said the Arizona senator, who has been criticized by Democrats for stalling an agreement on the plan.

McCain commended the bipartisan co-operation exemplified by the ongoing negotiations on Capitol Hill. He said there was no doubt the country is facing a crisis, not just on Wall Street but Main Street, too.


John McCain confirmed he would attend the debate less than 10 hours before it was scheduled to begin Friday. ((Ron Edmonds/Associated Press))

"This package has transparency in it and it has to have accountability and oversight and it has to have options for loans to failing businesses rather than the government taking over those loans," said McCain.

Obama, 47, noted he had put forward a series of proposals to protect taxpayers during the rescue effort.

"Number one, we've got to make sure that we've got oversight over this whole process," Obama said, adding, the amount that could be involved, "$700 billion, potentially, is a lot of money."

He was quick to fault President George W. Bush for what he described as eight years of failed economic policies — policies that were supported by McCain, Obama said.

McCain, 72, rebutted by accusing Obama of being a new-found opponent to wasteful government spending.

The debate, which was in jeopardy until several hours before it began, was the first direct Obama-McCain encounter before a national audience. Americans will vote for the man they think is best suited to replace Bush on Nov. 4.

Candidates field questions on Afghanistan

The candidates debated taxes, energy, the war in Iraq and other foreign policy issues such as U.S. relations with Russia and Iran during the 90-minute session. They also addressed the conflict in Afghanistan, where Canada currently has about 2,500 soldiers.

Obama said he would send an additional two to three brigades of U.S. soldiers to Afghanistan "as quickly as possible" to battle a growing Taliban insurgency.

"We have four times more troops [in Iraq] than we do in Afghanistan and that is a strategic mistake because every intelligence agency will acknowledge that al-Qaeda is the greatest threat against the United States," Obama said.

He added that the U.S. must be prepared to take military action in neighbouring Pakistan to root out extremism if the Pakistani government wasn't co-operative.

McCain was quick to distance himself from Obama's position on the issue, saying he wasn't prepared to threaten Pakistan with military strikes.

"You don't do that. You don't say that out loud," McCain said. "If you have to do things, you have to do things. And you work with the Pakistani government."

Tensions have been growing between U.S. and Pakistan military forces along the volatile Pakistan-Afghan border in recent weeks, after U.S. commandos conducted a raid in South Waziristan on Sept. 3.


Barack Obama called for more U.S. troops in Afghanistan to combat al-Qaeda and the Taliban. ((Ron Edmonds/Associated Press))

Both candidates had reportedly rehearsed tirelessly for the debate, which was meant to focus on but not be limited to foreign policy issues, which are considered McCain's forté.

Neither emerged as the clear winner in the first of three debates scheduled before the election.

"In the final analysis, both men achieved what everybody starts and wants to do in a first debate and that is to leave the floor unbowed and unbloodied," the CBC's Henry Champ said from Washington.

"I don't think that there was a knockout blow cast anywhere."

Friday night's exchange came after days of uncertainty over whether McCain would participate.

The Republican candidate announced Wednesday he intended to suspend his campaign and return to Washington to deal with the financial crisis, saying he wanted to postpone Friday's debate in order to focus his attention on the economy.

Obama had said he would attend regardless of whether McCain was present or not.

McCain makes last-minute commitment 

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

McCain was expected to fly back to Washington following the debate to continue work on the bailout plan, in which the government would buy toxic mortgage-backed assets from beleaguered financial institutions.

McCain has withheld his support of a bailout worked out by Congressional negotiators, said people from both parties who were briefed on a meeting held at the White House on Thursday.

Obama, as well as Democratic and Republican leaders from the U.S. House of Representatives and the Senate, were also present at the summit, which was called by Bush.

Congressional negotiators spent most of Friday in closed-door meetings to work out an agreement on the administration's proposed bailout. A key Democrat in the negotiations, Rep. Barney Frank, said he expected an agreement on the plan as soon as Sunday.

Conservative House Republicans have reportedly proposed an alternative strategy that would have banks, financial firms and other investors that hold mortgage-backed securities pay the Treasury Department to insure them rather than have those investments bought with taxpayer dollars.

The debate, against the backdrop of the Wall Street crisis, had political observers wondering if it would turn out to be America's most-watched presidential debate. The record was set in 1980 when 80.6 million people watched a debate between U.S. President Jimmy Carter and Republican challenger Ronald Reagan.

With files from the Associated Press