OXFORD, Mississippi (Reuters) - Republican John McCain ended days of suspense and agreed to attend the first of three debates with Democrat Barack Obama on Friday, setting up a showdown that could help decide a tight White House race.
With time running out, McCain backed away from his vow to skip the debate if negotiations were not completed on a $700 billion rescue of the U.S. financial industry. His campaign said enough progress had been made that he could participate in the 9 p.m. EDT debate.
"The McCain campaign is resuming all activities," a campaign statement said. "Following the debate, he will return to Washington to ensure that all voices and interests are represented in the final agreement."
McCain flew to Oxford, walked through the debate hall and held a debate preparation session at the local high school in the afternoon.
Obama was on his campaign plane in Washington preparing for the flight to Mississippi when McCain's announcement was made at midday. He also visited the University of Mississippi debate hall before the event.
Both men spent the hours before the debate resting at the same campus hotel, steps from where they will hold their first face-to-face battle of the campaign.
The debate is scheduled to focus on foreign policy and national security, but the turmoil on Wall Street has dominated the campaign trail for nearly two weeks and is certain to be discussed.
White House talks among McCain, Obama and congressional leaders ended in disarray on Thursday with no agreement on a stalled $700 billion bailout plan proposed by the Bush administration.
Both camps blamed each other for sinking the talks and accused their opponent of injecting politics into the process. "Barack Obama's priority was political posturing," the McCain campaign said in its statement about the negotiations.
Obama told reporters just before McCain's announcement that the White House meeting was not "as productive as it could have been."
"My strong sense is that the best thing I can do, rather than to inject presidential politics into some delicate negotiations, is to go down to Mississippi and explain to the American people what is going on," the Democratic presidential nominee said.
McCain's decision to attend the debate was a significant reversal after the Republican nominee said on Wednesday he was suspending his campaign and remaining in Washington until the bailout package was completed.
The Arizona senator did not suspend other campaign activities, however, and remained in New York until he gave a speech there on Thursday.
His decision to participate was a relief to organizers at the National Commission on Debates and the hosts at the University of Mississippi, which spent about $5 million to accommodate the event, and the 3,000 journalists who descended on Oxford to cover it.
The first debate was expected to be watched by far more than the 40 million Americans who saw the convention acceptance speeches of McCain and Obama, and could be a crucial factor for undecided voters in the November 4 election.
Public opinion polls have shown Obama making gains over the past week on the question of who could best lead the country on economic issues, and most polls have the Illinois senator holding a slight and growing lead over McCain.
Both camps have worked to raise expectations for their opponents in the high-stakes confrontation.
Obama aides noted that national security and foreign policy were a strength for McCain, a 26-year veteran of Congress and a former prisoner of war in Vietnam. Opinion polls show voters favor McCain on security issues.
"Given his unsteady performance this week, he desperately needs to win this debate in a big way in order to change the topic and get back to his home turf," the Obama campaign said in a memo to reporters.
The McCain campaign responded with a sharp message of its own about Obama.
"Barack Obama has been a steady campaigner, and a steady legislator, but he has been steadily wrong, and as a leader he has no record at all," said Michael Goldfarb, a spokesman for McCain.
The second presidential debate is scheduled for October 7 and a third on October 15. The two vice presidential candidates -- Republican Alaska Gov. Sarah Palin and Democratic Sen. Joe Biden of Delaware -- will debate next Thursday.
Additional reporting by Steve Holland; Editing by David Wiessler