UPDATE 1-Clinton faces Kenya cattle fine over Obama photo

(Recasts, adds details, quotes)

By Daniel Wallis

NAIROBI, Feb 29 (Reuters) - Kenyan elders may impose a fine on U.S. presidential hopeful Hillary Clinton, payable in livestock, after a photo of her rival Barack Obama in robes dragged their people into the race for the White House.

The picture, which appeared on a U.S. Web site, showed the Illinois senator in a white headdress and traditional Somali attire during a 2006 visit to Wajir in Kenya's remote northeast.

Obama has battled a whispering campaign by fringe elements who wrongly say he is Muslim and his aides accused Clinton's campaign of "the most shameful, offensive fear-mongering" after the photograph was published.

Wajir elders resolved to file an official complaint with the U.S. Embassy in Nairobi, dropping earlier plans to hold a protest after Friday prayers.

They said they would also convene a traditional Somali court to investigate the matter. It can impose fines that are payable in cattle, goats or camels.

"We will go ahead with this case whether Senator Clinton or Democratic party leaders turn up or not," said Mohamed Ibrahim, a member of the clan that hosted Obama during his trip. "But this whole thing can be avoided if only an apology is made."

The late father of the Democratic frontrunner was from western Kenya.

Many in the east African country support Obama the way the Irish idolised U.S. President John F. Kennedy in the 1960s -- as one of their own who succeeded beyond their wildest dreams.

"The clan he was with have every right to be offended," said Hussein Ali, a 32-year-old unemployed man outside the main Jamia Mosque in the capital Nairobi.

"Obama's enemies are trying to portray him as a terrorist, saying all Muslims, and especially Somalis, are dangerous men."

MOLLIFIED LOCALS

Clinton's campaign denies authorising the release of the controversial photo but says that, with 700 staffers, it could not be certain someone had not sent it out unofficially.

That has not mollified locals in Wajir, a small desert town near the Somali border, who demanded Clinton "clear her name".