The Group of 20 will become the forum for global economic management, giving rising powers such as China more clout, and roll out tougher rules on bank capital by the end of 2012, a draft communique said on Friday.

Western powers' standoff with Iran broke into attempts to ensure the world emerges from a savage recession with better safeguards against another crisis.

In Pittsburgh, U.S. President Barack Obama and the leaders of Britain and France will accuse Iran of concealing a covert nuclear plant, a senior White House official said.

The U.N. nuclear watchdog said earlier on Friday that Iran has told it of a second uranium enrichment plant under construction, a belated disclosure sure to heighten Western fears of an Iranian bid for atom bombs.

But how to ensure and sustain economic recovery remained the main topic at the summit, which includes the world's richest nations and emerging powers such as China, India and Brazil.

The G20 vowed to keep emergency economic support in place until a recovery was secured, according to the draft communique.

We will avoid any premature withdrawal of stimulus, the draft obtained by Reuters said.

At the same time, we will prepare our exit strategies and, when the time is right, withdraw ... extraordinary policy support in a cooperative and coordinated way, maintaining our commitment to fiscal responsibility, it said.

The document said G20 countries, which account for 90 percent of the world's output, would try to secure next year a deal in long-running world trade talks.

Similar pledges have been made at a number of international gatherings, so far without result.

The G20 agreed to rein in financial industry excesses that triggered the credit crisis two years ago.

Tighter rules on how much capital banks must have to absorb losses should be ready by the end of 2010 and will be phased in in the following two years, the draft said.

It also tackled the contentious issue of bankers' pay schemes, blamed for fostering a high-risk corporate culture that led to heavy losses and taxpayer-funded bailouts.

The document suggested linking pay to long-term value creation, not excessive risk-taking.

However, it did not mention direct caps on pay as proposed by some European leaders. French officials said the summit had not reached a final accord on executive pay.

A final communique will be issued when the leaders wind up their meeting late on Friday and is subject to change.

The document failed to lift global stocks. They weakened after central banks said on Thursday they were scaling back massive injections of dollars into their banking systems as financial markets stabilized.

TACKLING IMBALANCES

In another boost for countries such as China and India, the G20 unexpectedly moved close to a deal shifting more voting power at the International Monetary Fund to some developing countries, recognizing their growing clout.

In return, the draft communique suggested, the G20 won their commitment to do their part in rebalancing the world economy.

That rebalancing act involves the debt-laden United States saving more and export powerhouse China consuming more.

The draft said G20 countries with either sustained, significant surpluses -- a description that fits China -- pledged to strengthen domestic sources of growth.

By the same token, countries with big deficits -- such as the United States -- pledged to support private savings.

It was, however, unlikely any countries would consent to G20-imposed rules on how to run their domestic economy.

Some of that is already happening due to the recession.

U.S. consumers -- long viewed as the world's shoppers of last resort -- have cut spending as household wealth has shrunk, while China is spending about $600 billion to stimulate its economy and make it less dependent on exports.

U.S. President Barack Obama's first G20 summit as host tests his ability to juggle domestic and foreign policy, with his cornerstone healthcare bill being wrangled over in Washington.

TOP FORUM

The global economy appears to be recovering faster than many economists had predicted, largely thanks to furious interest rate cuts, emergency central bank lending, and roughly $5 trillion in government stimulus money.

But with unemployment high and banks still struggling to absorb heavy losses primarily from failing U.S. mortgage loans, the pressure is on the G20 to sustain economic assistance and coordinate how and when the emergency stimulus is phased out.

We designated the G20 to be the premier forum for our international economic cooperation, the draft communique said.

The move means the G20 supplants the G7 and G8, institutions dominated by rich Western economies, which will now be forums for discussing geopolitical issues, diplomats said.

The draft showed leaders endorsed an agreement on phasing out subsidies for fossil fuels to help combat global warming, but with no fixed date for the change.

Many G20 governments, including countries such as China, India and Russia, give tax breaks and direct payments to companies that help them produce coal, oil and other fossil fuels that cause greenhouse gases blamed for global warming.

(Reporting by Reuters G20 team; Writing by Mike Peacock; Editing by Toby Chopra)

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