* Jeb Bush disappointed at governor's decision
* State's Republicans hold nominating contest on Saturday
* Rivals Ted Cruz, Donald Trump exchange harsh words
(Adds Haley endorsement, quotes)
By Steve Holland and Emily Stephenson
CHARLESTON, S.C./WASHINGTON, Feb 17 (Reuters) - South
Carolina Governor Nikki Haley, viewed as a possible Republican
vice presidential candidate, endorsed U.S. Senator Marco Rubio
on Wednesday for their party's 2016 White House nomination,
three days before the state's presidential primary.
"If we elect Marco Rubio, every day will be a great day in
America," Haley said with Rubio at her side at an event in
Chapin, South Carolina.
Haley's endorsement gave Rubio, 44, a valuable ally to try
to sway voters in South Carolina, the third contest after Iowa
and New Hampshire to pick a party nominee for the Nov. 8
presidential election to succeed Democratic President Barack
Obama.
Rubio is seeking to take second or third place in South
Carolina's Republican primary on Saturday and potentially emerge
as the main Republican establishment alternative to front-runner
Donald Trump, who has a big lead in the state.
"I can't tell you how honored I am to get the support of
your governor. We have a lot of good candidates in the field,"
Rubio told the crowd.
The endorsement came as a new wave of bickering broke out
between Trump and U.S. Senator Ted Cruz of Texas, who is in
second place in the polls in South Carolina. Trump threatened to
sue Cruz over an anti-Trump TV ad that expressed doubts about
Trump's statement he is a conservative.
Cruz, Rubio and retired neurosurgeon Ben Carson were to
appear at a CNN town hall in Greenville, South Carolina, on
Wednesday evening, with Trump on MSNBC about the same time.
BLOW TO BUSH
The daughter of Indian immigrants, Haley, 44, seized the
spotlight in January when in the Republican response to Obama's
State of the Union speech, she set herself apart from the
party's presidential candidates by calling for tolerance on
immigration and civility in politics.
Last year, she gained national attention by leading an
effort to remove the Confederate battle flag from the state
Capitol grounds after the killing of nine black churchgoers in
Charleston. The Civil War-era emblem of the Confederate South is
long associated with slavery.
Some political analysts have said she could be picked as the
Republican vice presidential nominee.
Haley's endorsement of Rubio was a blow to the candidacy of
former Florida Governor Jeb Bush, coming two days after Bush's
brother, former President George W. Bush, met with Haley
privately in the state capital, Columbia.
A Bush aide said Haley called Bush to inform him of her plan
to endorse Rubio.
"Disappointed" was Bush's response to the endorsement.
"She's a very good governor and should I win the nomination,
there'll be a role for her in the campaign," Bush, 63, told
reporters after a campaign event in Summerville, South Carolina.
"Trust me, she's a great person."
At a town hall meeting in Summerville, Bush took advice from
the audience on how he might better conduct his campaign. Some
of the advice was conflicting.
Edward Scott, who works in South Carolina but lives in
Frederick, Maryland, told Bush he should consider not responding
to attacks from Trump, while another man asked Bush whether he
should be tougher, a "sumbitch" as he called it.
David Villinger of Summerville said Bush should focus less
on his record as Florida's governor and more on his presidential
vision. "I would encourage you to go not just on your record but
on your plan," he said.
Bush said he would not stop responding to Trump and vowed to
have a toughness of spirit.
CRUZ, TRUMP CLASH ANEW
Ahead of Saturday's Republican vote, Cruz and the
billionaire businessman Trump battled for votes with an exchange
of harsh words. Cruz, 45, won the first Republican nominating
contest in Iowa on Feb. 1 and Trump, 69, won the second one in
New Hampshire on Feb. 9.
Cruz dared Trump to sue him over a campaign ad featuring a
1999 video clip of the former reality TV star saying he was
"very pro-choice" on abortion. In the clip, Trump said he would
not ban late-term abortions.
Cruz said Trump sent his campaign a "cease and desist
letter" demanding it drop the ad. "File the lawsuit," Cruz, a
lawyer, told reporters on Wednesday, adding he would depose
Trump himself.
"You have been threatening frivolous lawsuits for your
entire adult life," Cruz said of Trump. "Even in the annals of
frivolous lawsuits, this takes the cake."
Trump responded that he opposes abortion, which most U.S.
conservatives also do not support.
"These ads and statements made by Cruz are clearly desperate
moves by a guy who is tanking in the polls - watching his
campaign go up in flames finally explains Cruz's logo," Trump
said in a statement, referring to the flame icon that appears on
Cruz's website and elsewhere.
The real estate developer again hinted he might sue Cruz,
who was born in Canada to a U.S. citizen mother, over his
eligibility to run for president.
(Editing by Howard Goller and Peter Cooney)