UPDATE 4-Trump backs compromise deal on biofuels policy -sources

(New throughout, adds details from source, comment from Grassley)

NEW YORK, March 1 (Reuters) - U.S. President Donald Trump told rivals from the oil and corn industry gathered at the White House on Thursday that he supports changing the nation's biofuels policy in a way that would limit costs to refiners while also expanding sales of ethanol, a source who attended the meeting told Reuters.

The apparent breakthrough comes amid rising concern in the White House over the current state of the U.S. Renewable Fuel Standard (RFS). The law, requiring refiners to mix biofuels such as corn-based ethanol into their fuel, has increasingly divided two of Trump's most important constituencies.

The source said Trump told attendees at Thursday's meeting that he supported capping the price of biofuels blending credits that refiners must acquire to comply with the RFS, while also expanding ethanol sales by raising ethanol content in gasoline.

A White House official did not immediately respond to a request for comment on the outcome of the meeting.

Republican Senator Charles Grassley of corn state Iowa, who attended, said after the meeting that an "emerging solution" on reforms to the U.S. biofuels law would allow for a year-round 15 percent ethanol blend for motor fuel.

"Emerging solution fr WH mtg 2day is year round e15," he said on Twitter, adding that the reforms would drive down prices for credits called RINs.

The meeting also included Republican Senators Joni Ernst of Iowa and Ted Cruz and Pat Toomey of refining states Texas and Pennsylvania, the White House had said in a statement before the meeting began.

Sources told Reuters that a number of companies were also represented, including Valero Energy Corp, Delta Air Lines' Monroe Energy, PBF Energy Inc, and Philadelphia Energy Solutions. PES last month blamed the RFS for its bankruptcy.

The biofuel industry was represented by officials from major producers POET and Green Plains Inc, along with others, the sources said.

A smaller meeting earlier this week ended with Grassley and Ernst calling White House efforts to help refiners cope with the regulation a threat to farmers and vowing to fight proposed changes. (Reporting by Jarrett Renshaw; editing by Bill Trott, Steve Orlofsky and David Gregorio)