WASHINGTON - President Barack Obama found common ground with Republicans on Tuesday over his top priorities of job creation and deficit reduction but drew a rebuke on healthcare reform.

A Democrat, Obama has been promoting a retooled strategy since an election in Massachusetts last month deprived his party of a super majority in the Senate and forced him to work more closely with rival Republicans.

After a roughly 90-minute White House meeting with congressional leaders from both parties, Obama indicated he would accept incremental steps rather than more sweeping measures to create jobs, his top domestic priority.

(It's) realistic for us to get a package moving quickly that may not include all of the things I think need to be done, Obama said during an impromptu news conference.

It may be that that first package builds some trust and confidence that Democrats and Republicans on Capitol Hill can work together, he said.

Eyeing November elections that could further change the balance of power in the Democratic-led Congress, the president sought to engage the opposition on shared priorities while accusing them of sometimes putting politics ahead of policy.

Republican leaders said after the meeting they saw a basis for support from both parties on expanding trade, nuclear power and offshore drilling -- all to help create jobs.

These are areas where I think there could be pretty broad bipartisan support to go forward on a collaborative basis, Senate Republican leader Mitch McConnell told reporters.

But Republican leaders gave no ground on healthcare, saying broad Democratic-backed legislation in its current form should be scrapped.

Obama's first year in office was characterized by sweeping -- not incremental -- proposals on healthcare, climate change and financial reform all still pending in Congress. Though improving, the economy is still a top concern for U.S. voters.

The economy grew by a brisk 5.7 percent year-on-year in the fourth quarter of 2009 and unemployment dipped to 9.7 percent in January. But the jobless rate remains historically high and the White House wants additional stimulus on top of a $787 billion emergency spending package Obama signed last year.

JOBS, JOBS, JOBS

Obama said the business world was anxious for certainty in policy areas such as financial reform and healthcare.

The sooner the business community has a sense that we've got our act together here in Washington and can move forward on big, serious issues in a substantive way without a lot of posturing and partisan wrangling, I think the better off the entire country is going to be, he said.

Obama repeated that he was willing to listen to Republican ideas on healthcare but rejected calls for a complete overhaul.

He said an energy package should include a mix of measures to boost nuclear, oil and gas production -- areas that appeal to Republicans -- along with new technology to boost renewable fuels such as wind and solar.

On jobs, Obama said both parties could agree to eliminate capital gains taxes for small businesses. He said he hoped all would support a way to get more capital to community banks lending to small businesses.

The House of Representatives passed a $155 billion jobs bill in December while the Senate has yet to act.

Senate Democratic leaders unveiled a set of job-creating ideas last week and said they would solicit Republican input before moving ahead with legislation.

Senate Majority Leader Harry Reid hoped to introduce a bill

on Monday and pass it by the end of the week, but he has been delayed by snowstorms that have kept many lawmakers from getting to work.

A jobs bill that could go through the Senate would extend soon-to-expire jobless payments, healthcare subsidies for the unemployed and highway-funding programs, according to the text of the bill obtained by Reuters.

Frankly, it is not ready yet, McConnell, the Senate Republican leader, said, referring to a jobs bill. Most of my members have not seen it yet. We're certainly open to it and ... there is a chance we can move this forward on a bipartisan basis.

In a potential sign of conciliation, House Republican leader John Boehner said the party was mulling appointing members to Obama's proposed bipartisan deficit commission.

Obama plans to issue an executive order to set up the commission to study options on spending and taxes after lawmakers failed to create a congressional panel on the issue.

(Additional reporting by Alister Bull, Ross Colvin, Steve Holland, Matt Spetalnick and Andy Sullivan; Editing by Howard Goller)

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