UPDATE 11-Trump: Saudi prince denies knowing what happened in consulate

Overnight, Turkish crime scene investigators entered the Saudi consulate for the first time since Khashoggi's disappearance, searching the premises for more than nine hours.

U.S. President Donald Trump said on Tuesday Saudi Arabia's crown prince denied knowing what happened in the Saudi consulate in Istanbul where Jamal Khashoggi vanished two weeks ago even as a congressional ally of Trump accused the prince of ordering the journalist's death.

Khashoggi, a U.S. resident and leading critic of influential Crown Prince Mohammed bin Salman, disappeared after entering the Saudi consulate on Oct. 2. Turkish officials have said they believe the Saudi journalist was murdered there and his body removed, which the Saudis have strongly denied.

Overnight, Turkish crime scene investigators entered the Saudi consulate for the first time since Khashoggi's disappearance, searching the premises for more than nine hours.

Trump dispatched U.S. Secretary of State Mike Pompeo to Riyadh to discuss Khashoggi's disappearance with the leaders of Saudi Arabia, a U.S. friend for decades and an ally against Iran.

"Just spoke with the Crown Prince of Saudi Arabia who totally denied any knowledge of what took place in their Turkish Consulate," Trump wrote on Twitter.

Trump also wrote that the crown prince "told me that he has already started, and will rapidly expand, a full and complete investigation into this matter. Answers will be forthcoming shortly."

U.S. Senator Lindsey Graham, a Republican close to Trump on some issues, called the crown prince a "toxic" figure, adding, "He can never be a world leader on the world stage."

"I've been their biggest defender on the floor of the United States Senate," Graham said. "This guy is a wrecking ball. He had this guy murdered in a consulate in Turkey and to expect me to ignore it. I feel used and abused," Graham said.

Republican Representative Jeb Hensarling, outgoing chairman of the House of Representatives Financial Services Committee, said Washington might have to seriously review relations with Saudi Arabia if Riyadh was involved in killing Khashoggi.

"If this was a state-sanctioned assassination, which it may prove to be, then there will have to be a fundamental rethinking of our relationship vis-a-vis the Kingdom of Saudi Arabia. Absolutely," Hensarling told Reuters.

Pompeo met Saudi King Salman and the crown prince on Tuesday. He will travel to Turkey on Wednesday for talks with Turkish officials about Khashoggi.

Pompeo said in a statement after his meetings that Saudi leaders had strongly denied any knowledge of what took place in the consulate in Istanbul.

"My assessment ... is that there is a serious commitment to determine all the facts and ensure accountability, including accountability for Saudi Arabia's senior leaders or senior officials," the top U.S. diplomat said in the statement.

The remarks reflect a dilemma for the United States, Britain and other Western nations in how to respond to an authoritarian monarchy that does not typically bow to foreign pressures. Saudi Arabia is the world's top oil exporter, spends lavishly on Western arms and is a major Sunni Muslim ally.

A search of the Saudi consul's Istanbul residence was called off for the day because Saudi officials were not able to join, Turkish police said. Foreign Minister Mevlut Cavusoglu had said earlier on Tuesday that Turkish officials would extend their investigation into Khashoggi's disappearance to include the residence of the Saudi consul and some vehicles.

U.S. media outlets reported on Monday that Saudi Arabia will acknowledge Khashoggi was killed in a botched interrogation. Trump speculated on Monday that "rogue killers" could be behind the disappearance but gave no evidence to back up that theory.

Members of the U.S. Congress, including some of Trump's fellow Republicans, are among the loudest voices in the United States calling for answers about Khashoggi, a Washington Post columnist. U.S. lawmakers have also been critical of Saudi Arabia over civilian casualties caused by its warplanes in the war in Yemen, in which it intervened three years ago.

Khashoggi moved to Washington last year fearing retribution for his criticism of Prince Mohammed, who has cracked down on dissent with arrests.

PAINTING OVER

Turkish President Tayyip Erdogan indicated that parts of the Saudi consulate in Istanbul had been repainted since Khashoggi's disappearance.

"The investigation is looking into many things such as toxic materials and those materials being removed by painting them over," Erdogan told reporters.

A Turkish security source said the search of the consulate provided "strong evidence" but no conclusive proof that Khashoggi was killed there.

The source confirmed that Saudi Consul General Mohammad al-Otaibi left Istanbul on Tuesday, returning to Riyadh. The source said Turkish authorities had not asked him to go.

Trump has threatened "severe punishment" if it turns out Khashoggi was killed in the consulate but ruled out scrapping arms deals with Saudi Arabia worth tens of billions of dollars.

Indicating unease over the Khashoggi case, international media and business executives are pulling out of an investment conference next week.

London Stock Exchange Chief Executive David Schwimmer joined the list on Tuesday, as did the CEOs of HSBC, Standard Chartered, Credit Suisse, and BNP Paribas, and David Bonderman, the billionaire chairman and founding partner of private equity firm TPG.

Saudi Arabia has said it would retaliate against any pressure or economic sanctions.

CNN reported on Monday that after denying for two weeks any role in his disappearance, Saudi Arabia was preparing to say he died in a botched interrogation. The New York Times reported that Prince Mohammed had approved an interrogation or abduction of Khashoggi and the government would shield him by blaming an intelligence official.

Saudi authorities could not be reached for comment.

Turkish authorities have an audio recording indicating that Khashoggi was killed in the consulate, Turkish sources have told Reuters.

The Saudi riyal rebounded after falling to its lowest in two years over fears that foreign investment could shrink. The Saudi stock index initially dropped 3 per cent but ended up after state-linked funds came in to buy towards the close. (Additional reporting by Yesim Dikmen and Sarah Dadouch and Bulent Usta in Istanbul, Orhan Coskun, Gulsen Solaker, Ece Toksabay and Tuvan Gumrukcu in Ankara, John Revill in Basel, Oliver Hirt in Zurich, Lawrence White in London and Jonathan Spicer, Lesley Wroughton, Tim Ahmann and Susan Heavey in Washington; Writing by Alistair Bell Editing by Yara Bayoumy, Grant McCool and Will Dunham)

(With inputs from agencies.)