By Steve Holland and Emily Stephenson

SUMMERVILLE, S.C./WASHINGTON (Reuters) - South Carolina Governor Nikki Haley, viewed in Republican circles as a possible U.S. vice presidential candidate, will endorse U.S. Senator Marco Rubio for their party's 2016 White House nomination on Wednesday, three days before her state's presidential primary, said a source familiar with the situation.

The daughter of Indian immigrants, Haley, 44, seized the spotlight in January when in the Republican response to President Barack 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.

Rubio, 44, from Florida, hopes to get a boost from South Carolina voters, where Republicans on Saturday hold their third contest after Iowa and New Hampshire to pick a party nominee for the Nov. 8 presidential election. Haley was to endorse Rubio at an event later in the day.

A campaign aide to former Florida Governor Jeb Bush said Haley called Bush, also vying for the party nomination, 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."

Haley's endorsement of Rubio was a blow to Bush, coming two days after Bush's brother, former President George W. Bush, met with Haley privately in the state capital Columbia.

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.

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Edward Scott, who works in South Carolina but lives in Frederick, Maryland, told Bush he should consider not responding to attacks from front-runner Donald Trump, while another man asked Bush whether he should be tougher, a "sumbitch" as he called it.

A third, 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, U.S. Senator Ted Cruz of Texas and the billionaire 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 that he would depose the billionaire himself.

The U.S. Supreme Court rocketed into campaign headlines last Saturday after the death of Justice Antonin Scalia. Cruz hopes to use the court opening to paint Trump, the Republican front-runner for the nomination, as insufficiently conservative ahead of Saturday's South Carolina vote. Presidents appoint justices to the court, and the U.S. Senate confirms the appointments.

"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. "Time will tell, Teddy," Trump said.

(Editing by Howard Goller)