McCain and Obama battle in contentious debate

Obama, 47, said he sometimes had trouble spotting a difference between the two.

"If I occasionally have mistaken your policies for George Bush's policies, it's because on the core economic issues that matter to the American people, on tax policy, on energy policy, on spending priorities you have been a vigorous supporter of President Bush," Obama said.

McCain, 72, an Arizona senator, was under intense pressure in the third and final debate to give a strong performance that could turn around a presidential race moving decisively in Obama's favour after weeks of economic turmoil and plunging stock markets.

Opinion polls three weeks before the November 4 election show more voters say they trust Obama's leadership on the economy, which has dominated the campaign-trail discussion and dwarfed McCain's expertise in foreign and military policy.

Two quick polls after the debate, by CBS News and CNN, judged Obama the winner. Obama won the first two presidential debates as well.

McCain called on Obama to explain his relationship with 1960s radical William Ayers, who served with Obama on a community board in Chicago and hosted a political event for him early in his career. Obama distanced himself from Ayers.

"Mr. Ayers is not involved in my campaign. He has never been involved in this campaign. And he will not advise me in the White House," Obama said.

Both candidates admitted the campaign's tone was "tough" and blamed the other. McCain said Obama had spent more money on negative ads than any candidate in history, while Obama noted a recent study said 100 percent of McCain's ads had been negative.

'PRETTY TOUGH'

"It's gotten pretty tough, and I regret some of the negative aspects of both campaigns. But the fact is that it has taken many turns which I think are unacceptable," McCain said.

He demanded Obama renounce the comments of Georgia Rep. John Lewis, a leader in the U.S. civil rights movement, who recently linked McCain to 1960s segregationist leader George Wallace.

"That, to me, was so hurtful," McCain said.

Obama said Lewis's link between McCain and Wallace was inappropriate "and we immediately put out a statement saying that we don't think that comparison is appropriate."

McCain said Obama could have prevented the campaign's negative turn if he had agreed to a series of joint town hall meetings proposed by McCain this summer.

Several recent opinion polls have shown McCain's attacks on Obama's character have largely backfired, increasing unfavourable opinions about McCain among voters looking for solutions on the economy.

But the two candidates spent long stretches battling over the grievances about their campaigns. Obama complained about the focus.

"The American people have become so cynical about our politics, because all they see is a tit-for-tat and back-and-forth," Obama said.

The candidates fought over their tax plans and promised to help working Americans like "Joe the plumber." McCain criticized Obama's proposal to raise taxes on those who make more than $250,000 (144,000 pounds) a year, saying it would hurt small business owners like Joe.

"Why would you want to raise anybody's taxes right now?" McCain asked Obama. "The whole premise behind Senator Obama's plans are class warfare, let's spread the wealth around."

Obama said his plan would cut taxes for 95 percent of Americans and raise them on only a small slice of the most high-income Americans, while McCain would give tax breaks to oil and gas companies.

"We both want to cut taxes," Obama, an Illinois senator, said. "The difference is who we want to cut taxes for."

The debate focussed on domestic policy and the economy. Obama and McCain were seated at a table with moderator Bob Schieffer of CBS News instead of standing at podiums as in the first debate.

(Editing by David Wiessler)