Hopes of a deal on climate change at the Group of Eight industrialised nations summit in Italy were today hanging by a thread.

As world leaders sat down for a working lunch at the start of a three day meeting of the G8, it emerged that negotiations had failed to reach agreement on halving greenhouse gas emissions by 2050.

Summit negotiators, who do the hard bargaining before the heads of state arrive to complete the agreements, failed to make progress on the issue in talks that continued late last night. China and India are understood to have blocked any mention of the target in the draft communiqué, insisting that the developed economies should promise to cut their own emissions sharply by 2020 before asking developing nations to commit to a long term target.

The breakdown in negotiations has undermined President Obama's chances of producing a diplomatic coup when he chairs talks on climate change at a meeting of the 17-nation Major Economies Forum tomorrow.

A helicopter carrying the US President and his wife Michelle touched down at an airforce base near Rome this morning after a flight from Moscow, where Mr Obama had held two days of talks with Russian leaders.

Mrs Obama emerged wearing a sleeveless yellow dress. She and her husband paid a courtesy call on the Italian President, Giorgio Napolitano, before heading north to the summit venue in the earthquake-shattered town of L'Aquila in the Abruzzo region.

The summit opened with debate on the economic crisis, after recent setbacks to hopes for rapid recovery. G8 leaders badly underestimated the economic problems facing them when they met in Japan last year and were expected to focus on what must be done to prevent another meltdown.

The G8 consists of Britain, France, Germany, Italy, Russia, the United States and Japan, but Italian Prime Minister Silvio Berlusconi has invited the leaders of the G5 major emerging economies - China, India, Brazil, Mexico and South Africa - to take part in many of the discussions, and other heads of state are also attending talks on climate change.

The early failure to agree on emissions is a blow to efforts to secure a new United Nations pact on climate change in December. Mr Obama, reversing recent US policy, wants a framework to succeed the 1997 Kyoto Protocol, which will expire in 2012.

Last year the G8 outlined a "vision" of halving emissions by 2050, but did not flesh out how this would be achieved.

Today's draft statement agreed that global temperatures should not be permitted to rise more than 2C above pre-industrial levels. If this is adopted by the G8 it would represent a small breakthrough. The four EU nations have been trying to persuade the US, Japan, Russia and Canada to set a threshold of 2C beyond which climate change reaches danger levels.

Greenpeace activists have climbed the chimney stack at four power stations in Italy this morning to demand tougher action on the environment.

Also missing from the draft documents being circulated to the delegates as they arrived is any detailed reference to currency or foreign exchange, an omission likely to annoy the Chinese delegation.

China has asked for a debate on global reserve currencies and argues there should be a shift over time away from a global financial system dependent solely on the US dollar. But the draft text being prepared for publication says only that there needs to be a smooth unwinding of currency account imbalances in order to allow the global economy to grow.

The drafts do however commit G8 and G5 leaders to reaching a balanced conclusion to the long-drawn-out Doha trade talks during 2010.

The bargaining clout of the Chinese delegation was weakened last night when the Chinese President, Hu Jintao, flew home from Italy to take charge of quelling unrest in the north-western Chinese province of Xinjiang, where civil turmoil has broken out between the Muslim Uighur majority and Han Chinese immigrants.

One analyst described Mr Hu's decision not to attend the summit and to postpone a subsequent state visit to Portugal as unprecedented.

"I have never seen a Chinese President shorten a trip abroad before. It's a sign of panic, there is clear concern," said Jean-Pierre Cabestan, professor of political science at Hong Kong Baptist University.

State Councillor Dai Bingguo has been delegated to take Mr Hu's place at the summit.

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