UPDATE 1-White House: Debt Talks Moving into "difficult Days"

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WASHINGTON (Reuters) - White House Chief of Staff Bill Daley said Sunday that negotiations over the U.S. debt limit and deficit reduction were moving into "difficult days" and said it was crucial to market confidence to get a deal soon.

Speaking on the NBC program "Meet the Press," Daley expressed confidence that Congress would act in time to raise the debt ceiling because congressional leaders have all said default is not an option.

Daley added, however, that markets around the world are waiting to see if U.S. officials can reach an agreement.

"We are now getting to a point where markets around the world will question whether the political system can come together and compromise for the greater good of the country," he said.

Daley said the White House wants a deal struck that would raise the debt ceiling by enough so that another vote is not needed before the November 2012 elections.

He said the White House is open to a two-step process in which some deficit savings are agreed upon later this year or early next year.

"This has to be two steps," he said. "But the second step must get us through '13 without having to go through this ridiculous fight over extending the debt ceiling."

(Reporting by Dave Clarke and Caren Bohan; Editing by Christopher Wilson and Will Dunham)