G8 leaders believe the world economy still faces significant risks and may need further help, according to summit draft documents that also reflect failure to agree climate change goals for 2050.

Discord over environmental measures was underlined by withdrawal from the meeting of Chinese President Hu Jintao, who returned to Beijing because of unrest in northwestern China in which 156 people have been killed.

Documents seen by Reuters ahead of a G8 summit cautioned that significant risks remain to economic and financial stability, while exit strategies from pro-growth packages should be unwound only once recovery is assured.

Before there is talk of additional stimulus, I would urge all leaders to focus first on making sure the stimulus that has been announced actually gets delivered, Canadian Prime Minister Stephen Harper said before the summit began.

Leaders met in L'Aquila, a mountain town wrecked by April's earthquake and a fitting backdrop to talks on a global economy struggling to overcome the worst recession in living memory.

The Group of Eight -- United States, Germany, Japan, France, Britain, Italy, Canada and Russia -- will kick off with debate on the economic crisis, after what one analyst called a reality check in recent weeks on the prospects for rapid recovery.

G8 leaders badly underestimated the economic problems facing them when they met in Japan last year and will now focus on what must be done to prevent another meltdown.

Although there have been signs of stability in the economy and the sentiment has improved, the real economy has not recovered yet with job and wage conditions still stagnant, said Takao Hattori, senior strategist at Mitsubishi UFJ Securities.

But few big initiatives are expected as the G20, a broader forum that also includes the main emerging economies, is tasked with formulating a regulatory response to the crisis and meets in September in Pittsburgh after an April summit in London.

DOLLAR DEBATE PLAYED DOWN

Not mentioning China's push for a sensitive debate about a long-term alternative to the dollar as global reserve currency, the draft talked only of global imbalances. G8 diplomats had said this might be the only oblique reference to currency.

Stable and sustainable long-term growth will require a smooth unwinding of the existing imbalances in current accounts, read the draft prepared for the G8 talks.

China complains that dollar domination has exacerbated the global crisis and worries that the bill for U.S. recovery poses an inflation risk for China's dollar assets, an estimated 70 percent of its official currency reserves.

Analysts said the decision not to refer to this directly could remove a destabilizing factor on currency markets.

U.S. President Barack Obama was expected to make his mark on his first G8 summit by chairing Thursday's meeting in L'Aquila of the 17-nation Major Economies Forum, whose members account for about 80 percent of global greenhouse gas emissions.

But MEF ministers, summoned at the last minute on Tuesday to prepare for the summit, failed to close the gap between U.S. and Europe on the one hand and emerging powers like China and India on the other hand.

Berlusconi spoke of meeting Chinese resistance and the G8 appeared to have failed to persuade China and India to agree to a goal of halving world greenhouse gas emissions by 2050.

A draft MEF document dropped any reference to this and aimed instead for agreement on the need to limit the average increase in global temperature to 2 degrees Celsius (3.6 degrees Fahrenheit) since pre-industrial times.

Cindy Baxter from Greenpeace said G8 leaders were watering down climate ambitions as deep emission cuts are a prerequisite for limiting temperature rises, but appeared to get no mention.

Developing nations, present in large numbers at the expanded G8 summit with more than 30 world leaders invited including nine African nations, argue that they need to be able to consume more energy in order to end poverty among their populations.

A packed first day is due to wrap up with talks on an array of international issues, including Iran's post-election violence and nuclear programme. However, these are unlikely to lead to any immediate action, such as a tightening of sanctions.

One area where a breakthrough is possible is trade. A draft communique suggested the G8 and G5 developing nations would agree to conclude the stalled Doha round of trade talks in 2010.

Launched in 2001 to help poor nations prosper through trade, the talks have stumbled on proposed tariff and subsidy cuts.

Leaders will also discuss a U.S. proposal that rich nations commit $15 billion over several years for agricultural development in poor countries to ensure food supplies.

(Additional reporting by Reuters bureaux across the world; writing by Stephen Brown; editing by Janet McBride)

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