John McCain and Barack Obama are heading for talks at the White House today amid signs that Congress is already close to sealing a compromise deal on the President Bush's proposed $700 billion Wall Street bailout.

Markets soared at the start of trading this morning after Congressional leaders and Administration officials agreed to include more protections for taxpayers and strict caps on pay packages for executives whose companies benefit.

Nancy Pelosi, the House of Representatives Speaker, went so far as to describe "an agreement in principle", adding: "I'm very pleased with the progress that has been made and I hope we will be able to bring a Bill to the floor soon."

The Dow Jones industrial average rose 2.15 per cent or 232.7 points at 11,052, while the Nasdaq Composite was up 38.39 at 2,194.07 or 1.74 per cent. The S&P 500 gained 24.95 points, or 2.1 per cent, to 1,211.55 in morning trade.

But sticking points remain on some key issues, including how to strengthen oversight of the Treasury's purchasing of bad debts, measures to provide more help for homeowners and a proposal for the federal government to own a stake in the financial institutions themselves.

Mr McCain, the Republican nominee, yesterday spoke to the Clinton Global Initiative where he confirmed he was suspending his campaign and seeking to postpone tomorrow's televised debate with his Democratic rival so that he can concentrate on finding a resolution to the financial turmoil.

"I’m an old Navy pilot, and I know when a crisis calls for all hands on deck. That’s the situation in Washington at this very hour, when the whole future of the American economy is in danger. I cannot carry on a campaign as though this dangerous situation had not occurred, or as though a solution were at hand, which it clearly is not," he said.

"With so much on the line, for America and the world, the debate that matters most right now is taking place in the United States Capitol – and I intend to join it."

There is deep irritation, bordering on alarm, among Democrats on Capitol Hill that Mr McCain should be intervening in this fashion. Many regard it as another stunt from a candidate trailing in opinion polls who has already taken high-risk moves such as picking Sarah Palin as his running mate and cancelling the first day of the Republican convention.

Senator Chris Dodd, the chairman of the Banking Committee, accused the Republican of politicising negotiations. "I'm beginning to think this is more of a rescue plan for his campaign than a rescue plan for the economy.'

Barney Frank, the chairman of the House Financial Services Committee, said: "We're going to have to interrupt a negotiating session tomorrow between the Democrats and Republicans on a bill where I think we are getting pretty close, and troop down to the White House for their photo op. I wish they'd checked with us."

Although it is possible that Republicans could seek to spin out talks so that Mr McCain is seen as brokering a last-ditch deal, such a strategy would be highly risky and campaign aides yesterday indicated that they expected tomorrow's debate would go ahead as planned.

But Bill Clinton today gave Mr McCain support, saying his decision to suspend campaigning had been made in "good faith". The Republican nominee returned the favour, describing his pride in having a lasting friendship with the ex-president – who has often been sharply at odds with Mr Obama

Mr Obama also spoke to Clinton Initiative by satellite link, where he reiterated the principles that should underpin any deal - and his determination to be in Mississippi for the tomorrow's debate.

"Let me be clear: it’s outrageous that we find ourselves in a position where taxpayers must bear the burden for the greed and irresponsibility of Wall Street and Washington. But we also know that a failure to act would have grave consequences for the jobs, and savings, and retirement of the American people," he said.

The two presidential candidates issued a joint statement on Wednesday night, saying: "The plan that has been submitted to Congress by the Bush administration is flawed, but the effort to protect the American economy must not fail," they said in a joint statement Wednesday night. "This is a time to rise above politics for the good of the country. We cannot risk an economic catastrophe."

Shortly afterwards Mr Bush addressed the nation on prime time TV to acknowledge that the bailout would be a "tough vote" for Congress but warned that without a deal, "our entire economy is in danger".

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