* Saudi Arabia acknowledges Khashoggi's death for first time
* Senior royal court advisor, deputy head of intel fired
* Official says there were "no orders" to kill or kidnap Khashoggi
Saudi Arabia said on Saturday a missing journalist had died in a fight inside its Istanbul consulate and it had fired two senior officials over his death, an account President Donald Trump said was credible but US lawmakers found hard to believe.
Saudi Arabia's acknowledgement that Jamal Khashoggi died in the consulate came after two weeks of denials it had anything to do with his disappearance, and followed growing demands from Western allies for an explanation of what happened.
His disappearance sparked a global outcry and prompted some US lawmakers to call for harsh action against Riyadh.
Saudi state media said King Salman had ordered the dismissal of two senior officials: Saud al-Qahtani, a royal court advisor seen as the right-hand man to Crown Prince Mohammed bin Salman, and deputy intelligence chief Ahmed Asiri, a statement on state media said.
Saudi Arabia provided no evidence to support its account of the circumstances that led to Khashoggi's death and it was unclear whether Western allies would be satisfied with the Saudi version of events.
"I think it's a good first step, it's a big step. It's a lot of people, a lot of people involved, and I think it's a great first step," Trump, who has made close ties with Saudi Arabia a centerpiece of his foreign policy, told reporters in Arizona.
"Saudi Arabia has been a great ally. What happened is unacceptable," he said, adding he would speak with the crown prince.
Trump also emphasized Riyadh's importance in countering regional rival Iran and the importance for American jobs of massive US arms sales to Saudi Arabia.
Some US lawmakers however were unpersuaded by Riyadh's account.
"To say that I am skeptical of the new Saudi narrative about Mr. Khashoggi is an understatement," said Republican US Senator Lindsey Graham, a Trump ally who has been sharply critical of Saudi Arabia over the incident.
Trump said he would be working with Congress on next moves, but "I would prefer that we don't use as retribution cancelling $110 billion worth of work, which means 600,000 jobs ... we need them as a counterbalance to Iran."
Khashoggi, a critic of the crown prince who lived in the United States and was a Washington Post columnist, had led to mounting pressure from the West on Saudi Arabia to provide convincing answers.
He went missing after entering the consulate on Oct. 2 to obtain documents for his upcoming marriage. Days later, Turkish officials said they believed he was killed in the building, an allegation Saudi Arabia had, until now, strenuously denied.
In a separate statement on Saturday, the Saudi public prosecutor said a fight broke out between Khashoggi and people who met him in the consulate, leading to his death.
"The investigations are still underway and 18 Saudi nationals have been arrested," the statement said.
Turkish sources have told Reuters the authorities have an audio recording purportedly documenting Khashoggi's murder inside the consulate. Turkish pro-government newspaper Yeni Safak has published what it said were details from the audio. It said Khashoggi's torturers cut off his fingers during an interrogation and later beheaded and dismembered him.
Before the Saudi announcements, Trump said he might consider sanctions, although he has also appeared unwilling to distance himself too much from the Saudi leadership.
Other Western allies have yet to react to Riyadh's explanation and a main question will be whether they believe Crown Prince Mohammed bin Salman, who has painted himself as a reformer, has no culpability.
King Salman has handed the day-to-day running of Saudi Arabia to his son, commonly known as MbS.
But, the disappearance of Khashoggi has tarnished Prince Mohammed's reputation and deepened questions about his leadership.
The growing crisis prompted the king to intervene, five sources with links to the Saudi royal family told Reuters.
The king also ordered the formation of a ministerial committee headed by the crown prince to restructure the general intelligence agency, state media said on Friday, suggesting MbS still retained wide-ranging authorities.
The White House said in a statement it would continue to press for "justice that is timely, transparent, and in accordance with all due process."
Republican Senator Rand Paul tweeted: "We should also halt all military sales, aid and cooperation immediately. There must be a severe price for these actions by Saudi Arabia."
Democratic Senator Richard Blumenthal told CNN the Saudi explanation "absolutely defies credibility" while Democratic Senator Jack Reed, the Ranking Member of the Senate Armed Services Committee, said the Saudis were still not coming clean with the truth.
"This appears to have been a deliberate, planned act followed by a cover up," he said in a statement. "You don’t bring 15 men and a bone saw to a fist fight with a 60 year old."
In an earlier rebuke to Riyadh, senior officials from several governments, including US Treasury Secretary Steven Mnuchin, executives from major companies, and international media commentators withdrew from a high-profile investment conference slated for later this month.
'No orders to kill him'Qahtani, 40, entered the royal court under the late King Abdullah but only rose to prominence after latching onto Prince Mohammed, becoming a rare confidante in his secretive inner circle.
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