By Julia Edwards Ainsley and Steve Holland
WASHINGTON (Reuters) - The U.S. Justice Department, in the face of rising pressure from Capitol Hill, named former FBI chief Robert Mueller on Wednesday as special counsel to investigate alleged Russian interference in the 2016 U.S. election and possible collusion between President Donald Trump's campaign and Moscow.
The move followed a week in which the White House was thrown into uproar after Trump fired FBI Director James Comey. Democrats and some of the president's fellow Republicans had demanded an independent probe of whether Russia tried to sway the outcome of November's election in favor of Trump and against Democrat Hillary Clinton.
Trump, whose anger over the allegations has grown in recent weeks, took the news calmly and used it to rally his team to unite, move on and refocus on his stalled agenda, a senior White House official said.
"We are all in this together," Trump told his team, the official said.
Trump said in a statement after the Justice Department announcement he looked forward to a quick resolution.
"As I have stated many times, a thorough investigation will confirm what we already know - there was no collusion between my campaign and any foreign entity," he said.
Mueller said in a statement tweeted by CBS News: "I accept this responsibility and will discharge it to the best of my ability."
Trump, who said in a speech earlier on Wednesday that no politician in history "has been treated worse or more unfairly," has long bristled at the notion that Russia played any role in his election victory.
The Russia issue has, however, clouded his early months in office. Moscow has denied the conclusion by U.S. intelligence agencies that it meddled in the campaign.
Pressure on the White House intensified after Trump fired Comey, who had been leading a federal probe into the matter, and allegations that Trump had asked Comey to end the FBI investigation into ties between Trump's first national security adviser, Michael Flynn, and Russia. That raised questions about whether the president improperly attempted to interfere with a federal investigation.
The issue spilled over onto Wall Street on Wednesday, where the S&P 500 and the Dow had their biggest one-day declines since September as investor hopes for tax cuts and other pro-business policies faded amid the political tumult. The Justice Department announcement came after the market close.
INNER CIRCLE
"My decision (to appoint a special counsel) is not the finding that crimes have been committed or that any prosecution is warranted. I have made no such determination," Deputy Attorney General Rod Rosenstein said in a statement announcing the special counsel.
"I determined that a special counsel is necessary in order for the American people to have full confidence in the outcome," he said.
Trump heard about Mueller's appointment from his White House lawyer Don McGahn about 25 minutes before it was made public, the senior White House official said.
Trump assembled his inner circle in the Oval Office - Vice President Mike Pence, chief of staff Reince Preibus, economic adviser Gary Cohn, senior strategist Steve Bannon, and others - and gave them a pep talk, dictating the statement that was soon released.
Trump told them the appointment would allow them to refer questions to Mueller, giving them space to focus on policies such as tax reform.
Lawmakers on Capitol Hill generally welcomed the Justice Department action and praised Mueller for his integrity, but House and Senate Republican leaders said they would go on with their own investigations of the Russia matter.
"A special counsel is very much needed in this situation and Deputy Attorney General Rosenstein has done the right thing," Senate Democratic leader Chuck Schumer said in a statement.
Republican House Judiciary Committee Chairman Bob Goodlatte said he was confident Mueller "will conduct a thorough and fair investigation."
DISCORDANT
A discordant note was sounded by Republican Representative Jason Chaffetz, chairman of the House of Representatives Oversight Committee, who praised Mueller's credentials but said: "I don’t think they should have appointed someone."
"I have not seen any evidence of actual collusion. Where is the actual crime that they think they need a special prosecutor to prosecute," Chaffetz told Fox News.
Mueller, 72, was decorated as a Marine Corps officer during the Vietnam War. A former federal prosecutor, he is known for his tough, no-nonsense managerial style. Appointed by Republican President George W. Bush, he became FBI director one week before the Sept. 11, 2001, attacks.
He was asked by Democratic President Barack Obama in 2011 to stay on for two more years and was replaced by Comey in 2013.
Mueller was credited with transforming the FBI, putting more resources into counterterrorism investigations and improving its cooperation with other U.S. government agencies.
Although Mueller will serve at the pleasure of Rosenstein, the job comes with independence and autonomy.
Some past independent investigations have stretched for years. Kenneth Starr, who investigated former President Bill Clinton, probed allegations surrounding Clinton's past real estate deals but later expanded the inquiry into his relations with then-White House intern Monica Lewinsky, leading to Clinton's impeachment by the House.
The White House was conducting interviews on Wednesday of candidates to replace Comey as head of the FBI.
A senior administration official said former Democratic vice presidential candidate and Senator Joe Lieberman, one of those interviewed by Trump, was among the leading candidates.
Trump's spokesman, Sean Spicer, said others being interviewed were acting FBI Director Andrew McCabe, former Oklahoma Governor Frank Keating and former senior FBI official Richard McFeely.