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RPT-UPDATE 3-Trump's business councils are disbanded after CEOs quit in protest

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WASHINGTON/NEW YORK, Aug 16 (Reuters) - U.S. President Donald Trump announced the disbanding of two high-profile business advisory councils on Wednesday after corporate CEOs quit in protest over his remarks blaming violence in the Virginia city of Charlottesville not only on white nationalists but also on the protesters who opposed them.

A parade of prominent Republicans and U.S. ally Britain also rebuked Trump after his comments on Tuesday about the weekend bloodshed further enveloped his seven-month-old presidency in controversy, paralyzed his policy aims and left him increasingly isolated.

Trump announced the dissolution of the American Manufacturing Council and Strategic and Policy Forum after a series of chief executives including Campbell Soup Co's Denise Morrison and 3M Co's Inge Thulin abandoned the panels. The two councils were moving to disband when Trump made his announcement on Twitter.

Trump, a real estate magnate who had never before held public office, was elected president last November touting his experience in the business world and ability to strike deals. But the Republican president has alienated many corporate leaders with some of his actions and stances.

The Strategic and Policy Forum was headed by Blackstone Group CEO Stephen Schwarzman, a close ally of Trump in the business world. Schwarzman organized a call on Wednesday for member executives to voice concerns after Trump's comments, and an overwhelming majority backed disbanding the council, two sources said. Schwarzman then called Trump to tell him about the decision to disband, and the president subsequently announced he was the one pulling the plug on the panels.

Prominent business figures heaped scorn on Trump on Wednesday.

"Racism and murder are unequivocally reprehensible and not morally equivalent to anything else that happened in Charlottesville," Morrison said.

JPMorgan Chase & Co CEO Jamie Dimon, a member of one of the panels, said he strongly disagreed with Trump's reaction to the events in Charlottesville, adding in a statement that "racism, intolerance and violence are always wrong" and "fanning divisiveness is not the answer."

Trump said on Twitter, "Rather than putting pressure on the businesspeople of the Manufacturing Council & Strategy & Policy Forum, I am ending both."

In Saturday's violence there were clashes between white nationalists staging a rally in Charlottesville and anti-racism activists opposing them. A woman was killed when a car plowed into the counter-protesters.

Among the very few public figures to have publicly voiced support for Trump through the controversy over his response were Vice President Mike Pence, former Ku Klux Klan leader David Duke and Richard Spencer, the head of a white nationalist group.

Along with the snubs from business leaders, Trump was rebuked by a string of Republicans including Senate Majority Leader Mitch McConnell, Ohio Governor John Kasich, Senator Lindsey Graham and former U.S. presidents George H.W. Bush and George W. Bush.

The president needs the support of his party as he tries to push his policy agenda, including tax cuts, through a Congress that is controlled by the Republicans.

INVESTORS WORRY ABOUT TRUMP AGENDA

A former senior Trump administration official raised the prospect that some White House officials could quit because of Trump's comments.

"If you have some high-profile individuals leaving, you may have a whole host of high-profile individuals leaving," said the official, speaking on condition of anonymity.

McConnell, who last week drew Trump's ire over the Senate's failure to pass healthcare legislation, issued a statement saying "messages of hate and bigotry" from white supremacists, the Ku Klux Klan and neo-Nazi groups should not be welcome anywhere in the United States. McConnell's statement did not mention Trump by name.

Share prices on the U.S. stock market came under pressure as the demise of the Trump business panels added to investor worries about the future of the White House's agenda.

"That throws a little bit more doubt into the president's abilities to push his policies through," said David Schiegoleit, managing director of investments at U.S. Bank Private Wealth Management in Newport Beach, California.

The dollar also weakened on the news, and U.S. Treasury debt prices gained on the most flight-to-safety bid, sending bond yields lower.

'BLAME ON BOTH SIDES'

Trump's remarks on Tuesday were a more vehement reprisal of his initial response to the bloodshed. At a heated news conference in New York, he said "there is blame on both sides" of the violence, and that there were "very fine people" on both sides.

Kasich said there was no moral equivalency between the Ku Klux Klan, neo-Nazis and anybody else.

"This is terrible. The president of the United States needs to condemn these kind of hate groups," Kasich said on NBC's "Today" show. Failure to do so gave such organizations a sense of victory and license to hold more events elsewhere, said Kasich.

In London, British Prime Minister Theresa May offered a rare rebuke of Trump by one of the United States' closest foreign allies.

"I see no equivalence between those who propound fascist views and those who oppose them and I think it is important for all those in positions of responsibility to condemn far-right views wherever we hear them," May told reporters when asked to comment on Trump's stance.

May has been widely criticized by political opponents in Britain for her efforts to cultivate close ties with Trump since he took office in January.

Politicians in Germany, which has tough laws against hate speech and any symbols linked to the Nazis who murdered 6 million Jews in the Holocaust, expressed shock at the images of people in Charlottesville carrying swastikas and chanting anti-Jewish slurs. The country's justice minister accused Trump of trivializing anti-Semitism and racism.

Pence, who is cutting short a trip to Latin America, said at a news conference in Chile that "I stand with the president and I stand by those words."

Senior U.S. military officers usually stay clear of politics, but two more of the U.S. military's top officers weighed in on Wednesday, without mentioning Trump.

U.S. Army Chief of Staff General Mark Milley wrote on Twitter, "The Army doesn't tolerate racism, extremism, or hatred in our ranks. It's against our Values and everything we've stood for since 1775."

Air Force Chief of Staff General Dave Goldfein said on Twitter that "I stand with my fellow service chiefs in saying we're always stronger together."

Their comments followed similar ones from the top officers of the Navy and Marine Corps.

A crowd including Virginia Governor Terry McAuliffe and U.S. Senator Tim Kane attended a memorial service on Wednesday for Heather Heyer, the 32-year-old woman killed in Charlottesville. A 20-year-old Ohio man said to have harbored Nazi sympathies has been charged with murder.

The Strategic and Policy Forum, which had 16 members when it was created last December, was designed to advise Trump on how government policy impacts economic growth, job creation and productivity.

The White House American Manufacturing Council, which started in January with 25 CEOs of top U.S. companies, was designed to promote job growth in the United States.

(Reporting by David Shepardson in Washington and Michael Erman in New York; Additional reporting by Susan Heavey, Steve Holland, Makini Brice and Mohammad Zargham in Washington; Writing by Will Dunham; Editing by Howard Goller and Frances Kerry)