L'AQUILA, Italy Leaders of the world's richest and main developing nations meet on Thursday to try to find common ground on global warming and international trade, with the poorer countries seeking concessions.
U.S. President Barack Obama will chair the climate discussions, but hopes of agreeing ambitious goals have faded after China and India rejected demands to halve emissions of greenhouse gases by 2050.
The talks take place on the second of a three-day Group of Eight summit, with discussions broadened to include the heads of new economic powerhouses in recognition that the world's problems can no longer be dealt with by an elite few.
The fragile state of the global economy dominated the first day of the annual G8 summit, with the United States, Japan, Germany, France, Britain, Italy, Canada and Russia acknowledging there were still significant risks to financial stability.
They also agreed to try to limit global warming to 2 degrees Celsius (3.6 Farenheit) above pre-industrial age levels and pledged to cut their greenhouse gas emissions by between 50 and 80 percent by mid-century.
The 17-member Major Economies Forum (MEF), which groups the G8 plus big developing nations, also looks set to embrace the 2 Celsius goal on Thursday, but is balking at further commitments ahead of a decisive U.N. climate conference in December.
Indian negotiators said developing countries first wanted to see rich nation plans to provide financing to help them cope with ever more floods, heatwaves, storms and rising sea levels.
Temperatures have already risen by about 0.7 Celsius since the start of the Industrial Revolution ushered in widespread burning of fossil fuels, and Italy's prime minister said everyone should share the burden of tackling the problem.
"It would not be productive if European countries, Japan, the United States and Canada accepted cuts that are economically damaging while more than 5 billion people in other countries carried on as before," Silvio Berlusconi said.
ECONOMY, CURRENCIES, TRADE
Broader economic concerns will also be high on the agenda on Thursday, with emerging nations complaining they are suffering heavily from a crisis that was not of their making.
China, India and Brazil have all questioned whether the world should start seeking a new global reserve currency as an alternative to the dollar. They have said they may raise this on Thursday after discussing it among themselves on Wednesday.
Indian Foreign Secretary Shivshankar Menon told reporters developing economies in the so-called "G5" had suggested the use of alternative currencies to settle trade between themselves.
The debate is highly sensitive in financial markets, which are wary of risks to U.S. asset values, and the issue is unlikely to progress very far in L'Aquila.
However, a breakthrough on trade did look within reach.
Diplomats say the G8 and G5 should agree to conclude the stalled Doha round of trade talks in 2010. Launched in 2001 to help poor countries prosper, they have stumbled on proposed tariff and subsidy cuts.
"We commit to reach a rapid, ambitious, balanced and comprehensive conclusion of the Doha Development Agenda," the G8 said in a joint statement on Wednesday.
G5 nations issued their own statement, saying they would try to address "any outstanding problems" on trade talks and that a successful conclusion of Doha would provide "a major stimulus to the restoration of confidence in world markets."
But they also called on the world's richest nations to tear down trade barriers and restore credit to the poorest countries.
(Writing by Crispian Balmer, editing by Ralph Gowling)