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G-8 leaders hope Greece remains in eurozone

President Barack Obama and other leaders of the Group of Eight industrial nations expressed hope Saturday that Greece will remain in the eurozone as they huddled for a shirt-sleeves summit aimed at keeping Europe's economic troubles from multiplying and spreading around the world.

Circling up around a table in a rustic cabin at the presidential retreat, the leaders underlined the need to keep bringing deficits down through austerity measures but also agreed that targeted spending on things like education and public works projects is needed to solve Europe's financial crisis.

"All of us are absolutely committed to making sure that growth and stability and fiscal consolidation are part of an overall package," Obama said.

Germany's Angela Merkel, for her part, said growth and deficit cutting reinforced each other "and that we have to work on both threads, and the participants have made that clear, and I think that is great progress."

The G-8 leaders' joint statement from the woods of Camp David reflected both hope and a recognition of the daunting economic challenges they face.

"The global recovery shows signs of promise, but significant headwinds persist," it said.

The summit brought together leaders of the United States, Germany, France, Canada, Italy, Britain, Russia, and Japan in an effort to figure out how to tame Europe's debt crisis while also increasing the demand for goods and spurring job growth.

Their statement conceded some points to Merkel's push for austerity, saying budget deficits needed to be closed. But it added that budget cutting should "take into account countries' evolving economic conditions and underpin confidence and economic recovery." That suggested a willingness to let indebted countries take more time to reduce their deficits in line with eurozone rules in order to lessen the deadening impact of cuts on the economy.

"The right measures are not the same for each of us," their statement said.

Their statement of support for Greece remaining in the euro underlined the potential and unpredictable damage to the global financial system that could come from a Greece departure. It follows a week of increasing speculation that Greece might not be able to stay the course.

Obama chose the secluded Camp David setting in part to give leaders a chance for an intimate and freewheeling discussion out of sight of most media and far from the raucous protests that have accompanied previous meetings of the G-8. Obama and his counterparts emerged briefly at midday for a group photo, strolling down from a cabin straddling a golf green with a sand bunker.

"Everybody give them one wave," Obama instructed the assembled leaders as they lined up for their official photo. "Let's look happy."

The setting gave the leaders a chance for informal walks and private exchanges on the cabin's patios on a warm spring day. Newly elected French President Francois Hollande said there had been "great frankness" in the discussions, and that leaders weren't digging in their heels on their respective positions.

First lady Michelle Obama, meanwhile, treated the leaders' spouses to lunch at the White House and a tour of its historic state rooms.

On the sidelines of the summit, Obama convened a lunch meeting of G-8 leaders and the leaders of Benin, Tanzania, Ghana and Ethiopia to discuss ways of improving food security in Africa. Obama said all of the G-8 leaders were committed to fulfilling the terms of a food security initiative developed in 2009 that led to $22 billion in government-backed pledges. "We're looking to go beyond what we agreed to three years ago," Obama said.

Obama's argument for additional stimulus measures alongside belt-tightening was primarily aimed at Germany, the strongest member of the union that uses the common Euro currency.

Merkel, speaking of the efforts to promote growth, said that "we have some investments for the future under consideration" in research and development, Internet networks and infrastructure. But she said "this doesn't mean stimulus in the usual sense." She added that "we are certainly open" to more use of the EU's development bank and infrastructure funds for Greece, but that Greece must keep to the strict terms of its bailout loans.

The G-8 session sets the stage for a far more consequential European summit in Brussels next week where the countries that share the euro as their currency hope to come together on specific steps to fight rising debt while spurring a recovery.

The Camp David gathering opened with a Friday evening discussion focused on global trouble spots Iran and Syria. Obama said the session also touched on North Korea's aggression and hopeful signs of democratic change in Myanmar.

"We are unified on our approach to Iran," and hopeful of progress ahead of a diplomatic meeting with Iran next week, Obama said Saturday.

Iran may have a peaceful nuclear energy program but misuse of that program for a nuclear weapon is unacceptable, Obama said. Ever-tighter economic sanctions cannot be loosened while the world encourages Iran to rein in its program, Obama said.

"All of us are firmly committed to continuing with the approach of sanctions and pressure in combination with diplomatic discussions," Obama said. "And our hope is that we can resolve this issue in a peaceful fashion that respects Iran's sovereignty and its rights in the international community, but also recognizes its responsibilities."

In a separate statement on world oil markets, the leaders said they stand ready to respond to oil supply disruptions from the sanctions on Iran. The leader said increasing disruptions "pose a substantial risk" to the global economy but that they stand ready to call upon the International Energy Agency to ensure that the oil market "is fully and timely supplied."

On Syria, Obama said the group supports a United Nations cease-fire plan that has yet to be honored in full. He said a statement to be issued at the close of the G-8 summit will reflect that support for the plan brokered by envoy Kofi Annan, but also say that the plan has not taken hold fast enough.

Most of the leaders are part of overlapping international coalitions formed to address the Iranian nuclear problem and the newer crisis in Syria, where an estimated 9,000 people have died in more than a year of violence that arose from the pro-democracy Arab uprisings.

Faced with implacable Russian opposition to significant new United Nations punishments on the Syrian regime, U.S. officials are trying to get consensus among other allies about ways to promote the ouster of Syrian President Bashar Assad's ouster.

"We all believe that a peaceful resolution and political transition in Syria is preferable," Obama said Saturday.

Later Saturday the leaders were returning to foreign affairs topics with discussion of Afghanistan and the Middle East.

For Obama, Europe's fate is critical to his own political survival. An economic recession that spreads to the U.S. could damage an already slow recovery and boost the argument by his Republican challenger, Mitt Romney, that the United States economy needs new leadership.

There is a get-acquainted aspect to the session as well.

The Camp David gathering, the largest collection of foreign leaders ever at the presidential retreat, is the first G-8 meeting for Hollande, Italian Prime Minister Mario Monti and Japanese Prime Minister Yoshihiko Noda. In what has been widely viewed as a snub, Russian President Vladimir Putin is skipping the G-8. He sent Prime Minister Dmitry Medvedev in his place.

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AP's Jamey Keaton contributed to this report.

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