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By TOM RAUM and JANE WARDELL, Associated Press Writers Tom Raum
And Jane Wardell, Associated Press Writers � 19 mins ago

TORONTO, Ontario � Briefly putting aside deep economic
differences, top world leaders on Saturday condemned North Korea
for the alleged sinking of a South Korean warship, set a five-year
exit timeline for Afghanistan and said the standoff in Gaza was
"not sustainable and must be changed."

In a joint statement, the leading eight industrial democracies
also criticized both Iran and North Korea for continuing their
nuclear march and called on both to heed existing United Nations
resolutions.

The statement was not as strongly worded as some nations had
hoped, including the United States, particularly in condemning
North Korea in the March sinking of the warship. Russia was cited
as a holdout against stronger language.

Street protests involving thousands of demonstrators that had been
mild earlier turned violent as black-clad demonstrators set fires,
including torching a police cruiser in the financial district of
Canada's most populous city and smashed windows in a shopping
district after veering off from the planned protest route.

At the summit meeting, the G-8 leaders � representing the United
States, Canada, Britain, France, Germany, Italy, Japan and Russia
� focused Saturday on foreign policy, where it appeared easier to
find common ground. This came after they differed on how best to
deal with a struggling world economy.

The leaders are divided on how best to keep the world economy
growing after the worst recession since the 1930s. They are
generally split between calls, mainly from the U.S., for more
government stimulus to keep countries from slipping back into
recession, and appeals from European countries and Japan for
spending cuts and even tax hikes to avoid Greece-like near
defaults.

For now, the leaders have generally cooled their rhetoric and
agreed that deficits must be tamed in the long term, but different
countries may use different tactics in the short term, depending
on their levels of indebtedness.

French President Nicolas Sarkozy told reporters that President
Barack Obama "clearly talked about the risks of debt and deficit"
in the U.S.

Still, said Sarkozy, "No leader contested the need to cut deficits
and debt and to do it in a pragmatic way, taking into account the
situation of each country."

Treasury Secretary Timothy Geithner said world leaders must work
together to make sure the global recovery stays on track. Although
the world economy has recovered somewhat, many challenges remain,
Geithner told reporters.

"The scars of this crisis are still with us," he said. "If the
world economy is to expand at its potential, if growth is going to
be sustainable in the future, then we need to act together to
strengthen the recovery and finish the job of repairing the damage
of the crisis."

Meanwhile, a senior U.S. official said Obama has decided to resume
talks aimed at resolving issues blocking the completion of a free
trade agreement with South Korea stalled since 2007 during the
administration of President George W. Bush.

The official said Obama plans to announce the new effort after
meeting with South Korean President Lee Myung-bak. The official
says the goal would be to clear up remaining differences with
Seoul by the time Obama visits South Korea in November.

The joint statement from the Group of eight nations, mainly
representing older, rich democracies, concluded the group's two-
day meeting at a lakeside resort about 140 miles north of Toronto.

Leaders then immediately returned to Toronto to continue their
talks in a broader meeting of the Group of 20, which includes
countries with fast-growing economies such as China, India and
Brazil.

Obama gave British Prime Minister David Cameron a lift in his
helicopter, called Marine One.

In Toronto, Canada's largest and most cosmopolitan city, police
hoped a steady rain Saturday would put a damper on anti-
globalization protests, but were bracing for possible violence by
splinter groups.

Previous summit gatherings have attracted massive protests by
anti-globalization forces. But so far the Canadian protests have
been smaller. The largest demonstration, a march in downtown
Toronto sponsored by labor unions and dubbed family friendly, was
scheduled for Saturday.

The back-to-back summits came amid what Canadian Prime Minister
Stephen Harper, the host, called an "enormous crisis facing us
all, serious threats to the stability, economic prosperity of
every country."

Leaders were also holding one-on-one sessions on the sidelines of
the two summits.

Obama planned to meet separately on Saturday with Chinese
President Hu Jintao, South Korean President Lee and Cameron.

It was Obama's first private meeting with Cameron since the
conservative took power last month with a coalition government.
Those talks were expected to cover the difficulties posed by the
BP oil spill, the biggest offshore oil spill in U.S. history.

The torpedoing of the South Korean warship was certain to be a
topic in Obama's meetings with the leaders of South Korea and
China.

The G-8 leaders cited an independent report that found that the
ship had been sunk by a North Korean torpedo. The leaders said:
"We condemn in this context the attack which led to the sinking of
the Cheonan."

Japanese officials said that Russia was the only G-8 member to
resist tougher language condemning North Korea more directly.

An official in the Russian delegation, who spoke on the condition
of anonymity because the leaders were meeting, said that Russia
still did not consider the results of the investigation to be
final and because of this, felt that condemning Pyongyang further
could lead to negative consequences.

"We condemned North Korea for its irresponsible behavior," Sarkozy
told reporters.

In their final statement, the G-8 countries also called current
restrictions on the flow of goods to Gaza "not sustainable and
must be changed."

"We welcome the decision of the Israeli Cabinet's announcement of
a new policy toward Gaza as a positive development," the
communique said.

And the leaders endorsed a five-year exit strategy on Afghanistan,
a timetable first proposed by Afghan President Hamid Karzai last
year.

"Clear steps by Afghanistan toward more credible, inclusive and
transparent parliamentary elections in September will be an
important step forward in the country's maturing democracy," the
statement said.

The statement also said that a conference in Kabul in July would
be an important setting for assessing progress in implementing
commitments made in January to train more than 100,000 additional
Afghan security forces by the end of next year.

Economic issues were expected to be more prominently debated at
the larger G-20 meeting, starting Saturday afternoon, as leaders
present conflicting views on how to keep the world economy
growing.

"We can't afford some sort of cataclysmic event" like the 2008
collapse of investment banking giant Lehman Brothers in 2008, said
Canada's Harper.

"We remain very engaged and very watchful of those situations," he
said.

The G-8 communique criticized both Iran's nuclear program and
urged greater adherence to human rights.

"We are profoundly concerned by Iran's continued lack of
transparency regarding its nuclear activities and its stated
intention to continue and expand enriching uranium," the G-8
communique said.

It also praised "ongoing efforts ... to persuade Iran's leaders to
engage in a transparent dialogue about its nuclear activities" by
China, France, Germany, Russia, Britain, the U.S. and European
Union officials. It also praised Brazil and Turkey for their
diplomatic overtures to Iran, even those were rejected by other
members of the international community. Brazil and Turkey were the
only two members of the U.N. Security Council to vote against the
most recent set of sanctions on Iran.

___

Associated Press writers Emma Vandore and Jeannine Aversa
contributed from Huntsville, Ontario; Rob Gillies, Foster Klug and
Martin Crutsinger from Toronto; David Nowak in Moscow.
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