Presidential rivals tout economic credentials

By John Whitesides

GREENWOOD, South Carolina (Reuters) - U.S. presidential candidates competed on Tuesday to look strong on the economy after an interest rate cut by the Federal Reserve and shaky markets worldwide exacerbated fears of a U.S. recession.

"As we saw overnight, this is a global economic crisis," Democratic Sen. Hillary Clinton of New York told reporters in Washington, fresh from a debate that highlighted tensions between her and her main rival for the Democratic nomination, Sen. Barack Obama of Illinois.

Clinton urged President George W. Bush to do more to help families hit by the U.S. mortgage crisis, which is a key factor behind the overall economic declines.

Republican Sen. John McCain of Arizona touted his economic plans and welcomed the drop in interest rates.

"I am concerned about financial market events, but with the right leadership and pro-growth policies the economy can weather this upheaval," said McCain, eager to build on his momentum after winning the party's nominating contest in South Carolina on Saturday.

Actor and former Tennessee Sen. Fred Thompson, familiar to millions for his television and movie roles, announced on Tuesday he was dropping out of the Republican race after drawing limited support and finishing third in South Carolina.

Democrats face off in South Carolina this Saturday before a much-awaited contest for both parties in Florida on January 29 and battles in more than 20 states on February 5 that could clarify who will represent the parties in the November presidential election.

OBAMA ACCUSES CLINTON

Clinton has portrayed herself as the best prepared candidate to shepherd the U.S. economy, but rival Obama said she had changed her stance on an economic stimulus package, a bankruptcy bill and on trade agreements.

"This is exactly the kind of politics we can't afford right now. Not when the stakes are this high. Not when the economy is this fragile," he said during an appearance at Furman University in Greenville, South Carolina.

He said he hoped the rate cut would help restore confidence in the U.S. economy.

Democrat John Edwards of North Carolina, who has pitched himself as the champion of working Americans but is struggling to break out of his third place status behind Clinton and Obama, said Bush's economic stimulus package left out millions of people.

The central bank cut interest rates by a hefty three-quarters of a percentage point, the largest single shift in interest rates since November 1994. Candidates praised the cut and called for Congress to pass a stimulus package soon.

Republican Mitt Romney, who has emphasized the business background he gained before entering politics, raised the possibility of a solvency crisis at U.S. banks and said recession fears had to be addressed quickly.

"More significant even than the stock market turbulence is the concern in the overall market and the fear we may head towards a recession," said the former Massachusetts governor, who made a fortune as a venture capitalist.