WRAPUP 17-Obama makes history with Democratic nomination

* Clinton does not concede

* Obama wins Montana, Clinton takes South Dakota

* McCain, Obama start November election campaign

By John Whitesides, Political Correspondent

WASHINGTON, June 3 (Reuters) - Barack Obama captured the Democratic presidential nomination on Tuesday, capping a rapid rise from political obscurity to become the first black to lead a major U.S. party into a race for the White House.

Rival Hillary Clinton, a former first lady who entered the race 17 months ago as a heavy favorite, briefly congratulated Obama but did not concede. The New York senator said she would consult with party leaders and supporters to determine her next move.

A surge of support from uncommitted delegates helped give Obama the 2,118 votes he needed to clinch the nomination as the lengthy Democratic battle concluded with an Obama victory in Montana and a Clinton win in South Dakota.

Obama will be crowned the Democratic nominee at the convention in August and will face Republican John McCain in November's election to choose a successor to President George W. Bush.

"Tonight, we mark the end of one historic journey with the beginning of another," Obama told a victory celebration in St. Paul, Minnesota, at the site of the Republican convention in September.

"Tonight, I can stand before you and say that I will be the Democratic nominee for President of the United States," he told 17,000 cheering supporters. Another 15,000 supporters gathered outside the arena.

The win by Obama, son of a black Kenyan father and white mother from Kansas, marked a milestone in U.S. history. It came 45 years after the height of the civil rights movement led by Martin Luther King, who was assassinated in 1968.

It followed one of the closest and longest nomination fights in recent U.S. political history. Clinton, who would have been the first woman nominee in U.S. political history, won more than 1,900 delegates.

She told New York members of Congress she would be open to becoming Obama's vice presidential running mate, and her backers turned up the pressure on Obama to pick her as his No. 2.

She told a cheering crowd of supporters in New York City that she would work for party unity but made no public overtures to Obama.

"This has been a long campaign and I will make no decisions tonight," she said. "In the coming days I'll be consulting with supporters and party leaders to determine how to move forward with the best interests of our party and my country guiding my way."

Obama lavished praise on Clinton after beating her.

"Senator Hillary Clinton has made history in this campaign not just because she's a woman who has done what no woman has done before, but because she's a leader who inspires millions of Americans," he said.

"Our party and our country are better off because of her, and I am a better candidate for having had the honor to compete with Hillary Rodham Clinton," he said.

An Obama aide said he called Clinton after their speeches, congratulated her on her South Dakota victory and asked her to call him back.

MCCAIN KICKS OFF RACE

McCain kicked off his race against Obama with a rally in Louisiana where he sought to distance himself from Bush and questioned Obama's judgment. He called Obama a "formidable" opponent but one who had not shown a willingness to put aside partisan interests.

"He is an impressive man, who makes a great first impression," McCain, 71, a former Vietnam prisoner of war, said of Obama. "But he hasn't been willing to make the tough calls, to challenge his party, to risk criticism from his supporters to bring real change to Washington. I have."

Obama questioned the extent of McCain's independence and tried to link him to Bush.

"While John McCain can legitimately tout moments of independence from his party in the past, such independence has not been the hallmark of his presidential campaign," he said.

"There are many words to describe John McCain's attempt to pass off his embrace of George Bush's policies as bipartisan and new. But change is not one of them."

Obama, 46, is serving his first term in the U.S. Senate from Illinois and would be the fifth-youngest president in history. He was an Illinois state senator when he burst on the national scene with a well received keynote speech at the 2004 Democratic convention.

His grueling battle with Clinton split the party, with blacks, young people and more educated and higher-income voters backing Obama, while Hispanics, older voters and white working-class voters backed Clinton.

Obama began the race as a decided underdog against Clinton, one of the best-known U.S. politicians but a polarizing figure who arouses strong passions among supporters and opponents.

He quickly developed a powerful fundraising machine that smashed financial records for a presidential race, and scored a breakthrough victory in the first nominating contest in Iowa, where Clinton finished third.

He generated huge crowds throughout the race, including 75,000 in Oregon in the biggest political rally in recent U.S. history.

As he neared the magic number needed to clinch the nomination, Obama's campaign urged the last 150 or so undecided superdelegates to make their endorsement before the voting ended so Obama could clinch the nomination on Tuesday.

A steady flow of superdelegates complied, with more than 50 backing Obama during the day. The Obama campaign released a list of another 26 delegates who pledged their support as the polls closed in Montana.

Both Obama and Clinton will speak to a pro-Israel lobbying group in Washington on Wednesday.

(Additional reporting by Caren Bohan, Thomas Ferraro, Jackie Frank and Ellen Wulfhorst; Editing by David Wiessler) (To read more about the U.S. political campaign, visit Reuters "Tales from the Trail: 2008" online at blogs.reuters.com/trail08/)