Republican John McCain was under pressure to rescue his sliding White House hopes Tuesday in his second presidential debate with Barack Obama, just four weeks from election day.

Hours after stocks on the Dow Jones Industrial Average crashed another 500 points, and as both campaigns escalated an already nasty race, the rivals were to clash in McCain's favored town-hall style setting in Nashville, Tennessee.

The debate at 8:00 pm (0100 GMT) gives McCain a chance to land a momentum-swinging blow to transform a campaign which has tipped towards Obama in recent weeks with voters blaming Republicans for the economic turmoil.

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.

Obama's senior strategist David Axelrod said Obama wanted to talk about how Americans were suffering in the financial crisis, but was ready for a fight.

"(McCain) has signaled to his supporters that he is going to be very aggressive in this debate, that he is going to take the gloves off," Axelrod told reporters on Obama's plane.

"I hope during the course of that he also has time to speak to the state of our economy, which is in deep trouble right now. But we are prepared for a very aggressive debate."

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

"This is a man who does not see America as you and I see it, as the greatest force for good in the world," Palin said Monday.

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

A McCain supporter asked the Republican last week "when are you going to take the gloves off?" McCain replied with a grin -- "How about Tuesday night?"

It was possible the intimate town-hall format at Belmont University would defuse the most intense clashes between Obama and McCain, given that the candidates will answer questions mostly from undecided voters in the audience.

The format puts a premium on a candidate's capacity to interact individually with voters -- a skill famously shown by Bill Clinton in a 1992 town hall debate that give him an edge over president George Bush.

The Obama campaign fired off a preemptive strike, accusing McCain of plotting a vicious character attack.

"In order to change the dynamics of this race, we anticipate that McCain will launch his nastiest attacks and continue to lie about Barack Obama's record and his vision to fundamentally change our country," Obama spokesman Bill Burton said.

But McCain advisor Nancy Pfotenhauer told MSNBC Obama was guilty of "shameful mischaracterizations" of the Republican's policies.

"Character does count," she said. "One of the reasons it counts particularly with Senator Obama is because he has so little known about him. He talks a lot but there is not a record to examine."

The debate, which will contrast McCain's edgy town-hall style with Obama's cool persona, comes amid financial turmoil and growing concern about the economy. Wall Street stocks lost another 5.0 percent on Tuesday.

McCain and Obama will have two minutes to answer each question selected by NBC newsman Tom Brokaw, followed by a five-minute discussion between them.

New polls meanwhile show 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.

A CBS poll however suggested that the race has tightened from a nine-point Obama lead to a four-point gap since last week's vice presidential debate.

The debate 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.