UPDATE 1-Obama touts jobs report as he seeks to lift campaign

* Romney: "Not what a real recovery looks like"

* Obama: "No excuse" to try to score political points

(Adds poll, Ohio visit, new quotes)

By Mark Felsenthal

FAIRFAX, Va., Oct 5 (Reuters) - President Barack Obama onFriday hailed a drop in the U.S. jobless rate to the lowestlevel since he took office, saying the country had "come too farto turn back now," as he sought to recover from a lacklusterdebate performance against Republican challenger Mitt Romney.

A decline in unemployment to 7.8 percent in September,announced just more than four weeks before Election Day, gave anunexpected shine to the most vulnerable part of Obama's record -his economic stewardship - and offered him a chance to reset hisre-election bid. The rate dropped from 8.1 percent in August.

The much-needed dose of positive news for the Democraticpresident came two days after he was widely judged the loser inhis first presidential debate against Romney, who breathed newlife into his own campaign.

Reinforcing a sense of momentum for Romney coming out of thefirst of three face-offs on the national stage, a newReuters/Ipsos poll of likely voters showed Obama's leadnarrowing to just 2 percentage points - 46 percent to hisrival's 44 percent. Obama had a 6-point advantage in Wednesday'spoll.

With Obama's supporters suddenly more nervous about hisre-election prospects, he sought to regain the initiative byfocusing on jobs numbers, which he welcomed as a source of "someencouragement" about his economic approach.

"Today, I believe that as a nation we are moving forwardagain," Obama told an enthusiastic crowd at a campaign rally atGeorge Mason University in Virginia. "More Americans entered theworkforce, more people are getting jobs."

"It's a reminder that this country has come too far to turnback now," he said.

He also seized the opportunity - both in Virginia and laterat a campaign event in Ohio, another critical swing state - toaccuse Romney of using the debate to reshape himself with an"extreme makeover" on everything from taxes to governmentregulations.

Romney had made the president's failure to drive the joblessrate below 8 percent a key plank in his campaign, so the drop tothe lowest level since January 2009 could deprive him of someammunition in the final sprint toward the Nov. 6 election.

Reacting to the data, Romney said the economy remained weakand noted that the unemployment rate would be closer to 11percent if it included those who had given up looking for work.

"This is not what a real recovery looks like," he said in astatement.

Taking a veiled swipe at the former Massachusetts governor,Obama said, "Today's news is certainly not an excuse to try totalk down the economy to score a few political points."

While pollsters disagree over how much of an effect economicdata have on voting intentions, a good jobs number can only bepositive for the incumbent, especially in the aftermath ofWednesday's debate that put Obama on the defensive.

"Good economic news is good political news. President Obamaneeded that after the debate and it gives him numerical evidencethat his policies are working," said Julian Zelizer of PrincetonUniversity.

Crucially, the report showed the U.S. workforce wasexpanding. In some recent months, the unemployment rate hadticked downward largely because many Americans had given up onlooking for work. Data showed that employers added 114,000 jobsin September.


In the Reuters/Ipsos poll, more than nine out of 10registered voters - 91 percent - said they had seen, heard orread something about the debate, and 54 percent said theythought Romney had done a better job.

Thirty percent said it made them feel more positive towardRomney. That was more than double the 14 percent who felt betterabout Obama after watching the two candidates go head-to-head.

The online prediction market Intrade showed the jobs reporthelped give Obama a better shot at the White House. It put hischances at re-election at about 69 percent, up from 66 percenton Thursday. Romney's chances on Intrade were about 31 percent.

It remained to be seen whether Obama's weak performance inDenver would become a long-term problem for the president. Hehas two more chances to redeem himself in debates - a second isset for Oct. 16, and the third is on Oct. 22.

Speaking to cheering supporters, Obama played up theimproving jobs market as fruits of his policies and warned aRepublican return to the White House could turn that around.

"We are not going to let this country fall backward, notnow. We've got too much at stake," he said.

He also kept up an attack on Romney as a flip-flopper whowas less than truthful at the debate.

"My opponent has been trying to do a two-step, andreposition," Obama said. "But the bottom line is his underlyingphilosophy is the top-down economics that we've seen before."

In a damaging video from a private fundraising speech,Romney said in May that 47 percent of voters were dependent ongovernment and unlikely to support him.

Three weeks after the video came to light, Romney completelydisavowed the remarks for the first time, telling Fox News onThursday that what he said was "just completely wrong."

Often criticized for being wooden, Romney's aggressivedebate performance on Wednesday gave his campaign a burst ofenergy after weeks of setbacks.

Looking at times tired and displeased, Obama did not seizeopportunities to attack the Republican on his business record atBain Capital, the Romney video and his rival's refusal torelease more income tax returns.

Romney addressed a large crowd in the coal country ofAbingdon, Virginia, and did not respond to the Labor Departmentreport until near the end of his remarks.

"There were fewer new jobs created this month than lastmonth and the unemployment rate has you know this year has comedown very, very slowly, but it has come down nonetheless," hesaid.

"The reason it has come down this year is primarily due tothe fact that more and more people have just stopped looking forwork," he said. "When I'm president of the United States ... theunemployment rate is going to come down, not because people aregiving up and dropping out of the workforce, but because we'recreating more jobs."

(Additional reporting by Steve Holland, Lisa Lambert andPatricia Zengerle; Writing by Matt Spetalnick; Editing byAlistair Bell and Peter Cooney)

((Matt.Spetalnick@thomsonreuters.com)(+1 202 898 8300)(ReutersMessaging: matt.spetalnick@thomsonreuters.com@reuters.net))

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