John McCain and Barack Obama clashed repeatedly over the financial crisis Tuesday but strove to show voters they cared about their economic fears in their second presidential debate.

Republican McCain was under intense pressure to throw his sliding campaign a lifeline, as he trails Democrat Obama by widening margins in national polls and in battleground states with time running out before the November 4 election.

After days of intensely nasty campaign trail rhetoric, the two senators strolled onto the stage in Nashville, Tennesse, smiling broadly, and shook hands, both patting the other on the arm before their "town-hall" style debate.

But the tension was clearly boiling just below the surface, as both senators laced their answers with attacks on each other's proposals and records.

McCain, who was widely criticized for rarely looking at Obama during their first debate two weeks ago, may have let his dislike of his opponent emerge again in a point likely to be discussed exhaustively after their showdown.

The Arizona senator said he voted against an energy bill laden down with tax breaks for big oil firms. "You know who voted for it? That one" he said, in a sharp comment directed at Obama.

In another swipe, McCain hit Obama on taxes.

"Nailing down Senator Obama's various tax proposals is like nailing jell-o to the wall," he said.

Obama repeatedly made a show of "correcting" McCain's interpretation of his record and proposals, and hit his top talking point of tying the Republican to the unpopular economic legacy of President George W. Bush.

"I believe this is a final verdict on the failed economic policies of the past eight years promoted by President Bush and supported by John McCain," Obama said.

McCain laid out a plan to buy up bad mortgages in the United States and renegotiate loans at diminished values to ensure people caught in the foreclosure crunch could keep their homes.

"Is it expensive? Yes. But we all know, my friends, until we stabilize home values in America, we're never going to start turning around and creating jobs and fixing our economy," he said.

Both candidates made clear efforts to speak to their audience directly, crossing the red-carpeted stage at Belmont University to stand a few feet away from the questioner, holding hand-held microphones.

"I understand your frustration and your cynicism," Obama said, like McCain looking in the eye individuals in the group of undecided voters posing the questions, and by extension addressing Americans in their homes.

The rivals packed their answers with attacks on each other's policies in the early exchanges, but also tried to keep their tones and body language positive.

McCain accused Obama of "taking a hike" on looming problems at the Fannie Mae and Freddie Mac mortgage giants which had to be bought up by the government.

Gallup's daily tracking poll Tuesday reflected the high stakes for McCain, giving Obama a nine point lead nationally, while the Democratic nominee is also widening his edge in key battleground states.

The McCain campaign, sensing the fast-running electoral clock, made a strategic turn in the run-up to the debate, sharply attacking Obama's character and suggesting he did not share basic American values.

McCain's running mate Sarah Palin has led the Republican assault, charging the Democratic nominee with associating with terrorists -- a reference to his past acquaintance with 1960s radical William Ayers.

Obama hit back by pointing to McCain's ensnarement in a devastating 1980s financial scandal, when the savings of many retired people controlled by jailed savings and loans tycoon Charles Keating were wiped out.

The debate comes amid financial turmoil and growing concern about the economy.

It went ahead as many Americans watched their market-linked pension portfolios tumble. The Dow plunged 508.39 points (5.11 percent) to a five-year closing low of 9,447.11 following a 369-point slide Monday.

New polls meanwhile showed Obama with a clear lead over his rival, with the Gallup survey pushing him to a lead of 51 percent to 42 and a CNN poll putting the Illinois senator on a 53 percent lead over 45 percent for McCain.

But a CBS poll suggested that the race has tightened from a nine-point Obama lead to a four-point gap since last week's vice presidential debate between Palin and Senator Joseph Biden.