Republicans take stock after Tea Party stunner

WASHINGTON (Reuters) - Divided Republicans pointed fingers and vowed to regroup on Wednesday after a stunning Tea Party upset in Delaware dealt a blow to their hopes of recapturing U.S. Senate control in November.

Conservative upstart Christine O'Donnell's defeat of nine-term U.S. Representative Michael Castle in a Senate primary ended the career of one of the last Republican moderates in Congress and set off a round of Democratic celebrations.

The loss by Castle, who had been expected to cruise to victory in the November 2 election, bolstered Democratic efforts to keep the Senate seat long held by Vice President Joe Biden and made it tougher for Republicans to pick up the 10 Democratic seats they need for a Senate majority.

Republicans are still expected to turn voter worries about the economy and President Barack Obama's leadership into big gains in November that could give them control of the House and perhaps even the Senate, once considered a longshot.

O'Donnell's win was the biggest in a string of upsets of establishment Republicans this year by loosely organized Tea Party candidates driven by anger at government in Washington and at Obama's ambitious agenda.

On Wednesday, O'Donnell bickered on Fox News with prominent Republican Karl Rove and complained of "Republican cannibalism" after attacks on her from the party establishment.

"I didn't count on the establishment to win the primary, I'm not counting on them to win the general," she said. "They obviously don't see what's going on in the country this year."

Rove, the architect of President George W. Bush's two White House wins, responded with a litany of allegations about her campaign debts, tax liens and personal background that he said would make it tough for her to win in November.

A TEA PARTY MOOD

The Tea Party's platform of limited government, lower spending and opposition to Obama could have a big impact on the Republican approach on the budget and taxes in the next Congress, and has proven a good match with the public mood.

"I'm not all torn up this morning," Republican strategist Jim Dyke said. "The mood of the country has not changed from yesterday, and that's an overwhelming opposition to the policies President Obama and Democrats have put in place."

Polls show Tea Party candidates doing well in states like Nevada, Kentucky and Colorado. Republican Marco Rubio is confounding predictions by leading a three-way Florida Senate race against a strong independent and a Democratic rival, a Reuters/Ipsos poll found.

The Delaware and New York results bolstered Democratic arguments the Republican Party has been taken over by extremists, giving them hope moderates and independent voters who are sour on Democrats will not find Republicans to be a suitable alternative in November.

"Democrats are making a big mistake if they deride Tea Party candidates as extremists when the top issues they are talking about are lower deficits and spending," Republican strategist Kevin Madden said.

But Democrats said Republicans had proven they did not have room for anyone who does not conform to their narrow agenda.

"I think the message is moderates are not welcome. Moderates keep out," Democratic Party Chairman Tim Kaine said on NBC's "Today" show.

The contest in Delaware highlighted the final day of primaries before November, with voters in seven states choosing nominees for the Senate, House of Representatives and governor's races.

In New Hampshire's Republican Senate primary, former state attorney general Kelly Ayotte, who had been endorsed by former Republican vice presidential candidate Sarah Palin, narrowly beat Tea Party-backed lawyer Ovide Lamontagne. O'Donnell also was backed by Palin.

The Tea Party movement won another high-profile race in New York, where political newcomer Carl Paladino easily beat the establishment choice, former U.S. Representative Rick Lazio, in the Republican gubernatorial primary.

Paladino, who pledges to spend up to $10 million of his own money, will be a huge underdog in the November race against Democrat Andrew Cuomo.

(Editing by Cynthia Osterman)