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Prime Minister Stephen Harper officially greeted leaders of the G20 nations inside a heavily fortified enclave in downtown Toronto at the start of the organization's summit.

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Laureen Harper greets Gursharan Kaur as Prime Minister Stephen Harper and Indian Prime Minister Manmohan Singh look on during an official dinner at the G20 Summit on Saturday in Toronto. ((Paul Chiasson/Canadian Press))

The prime minister and his wife, Laureen, greeted the G20 leaders and their spouses at a reception at the famed Royal York Hotel on Saturday evening. A working dinner followed.

The event seemed far from the chaos just blocks away outside the barricaded security zone, where protesters earlier set fire to police vehicles and smashed storefront windows, despite a $1-billion security tab and thousands of police at the ready.

The fragile global economic recovery is expected to top the agenda of the G20 summit, with world leaders split on when to end stimulus funds and slash deficits.  

Harper, as host of the summit, is expected to urge the more developed countries to commit to halving their deficits within three years as a way of restoring investor confidence after the recent turmoil caused by the Greek debt crisis.

Speaking at the close of the G8 summit in Huntsville, Ont., earlier Saturday, Harper said he believes there is a "strong consensus" among those countries on the need to commit to targets for reducing deficits in the medium term.

Harper said leaders at the G8 talks unanimously agreed the world needs to take collective action to prevent another "cataclysmic event" similar to the collapse of the Lehman Brothers investment bank in 2008.

The G20

Argentina, Australia, Brazil, Britain, Canada, China, the European Union, France, Germany, India, Indonesia, Italy, Japan, Mexico, the Republic of Korea, Russia, Saudi Arabia, South Africa, Turkey, United States

The collapse of the storied bank triggered a global financial meltdown and prompted leaders at last year's G20 summit to agree to emergency stimulus measures to revive the international economy.

"We can't afford a particular event that would cause a series of cascading events and a downward spiral of confidence," Harper told reporters. "That is the lesson from 2008, and that risk today overwhelmingly drives leaders."

But other leaders, foremost among them U.S. President Barack Obama, have advocated waiting until stimulus measures create more job growth before cutting off the funds and targeting deficits.

The world leaders are also divided on a proposal to impose a tax on major international banks. European nations such as England, France and Germany want an international tax on financial transactions, to pay for future bank bailouts, something Canada strongly opposes.

Violent protests sweep through city

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A masked protester walks by a burning Toronto police cruiser at King and Bay Streets in downtown Toronto on Saturday. ((Photo submitted by Robin Gartner))

The barricaded security zone established around the G20 site remained in lockdown as of 10 p.m. ET after a splinter group of militant protesters, dressed in black and wearing masks, broke from the main demonstration and wreaked havoc on nearby major streets.

The protesters set several police cruisers ablaze in the heart of the financial district and clashed with riot police. Two CBC News vans were also damaged.

A spokesman for the Prime Minister's Office condemned the violence. In a statement, Dimitri Soudas said free speech is a principle of Canada's democracy, but "the thugs that prompted the violence earlier today represent in no way, shape or form the Canadian way of life."

Foreign Affairs Minister Lawrence Cannon told CBC News the government was confident the authorities would handle the "events" taking place outside the perimeter.

He also defended spending for security at the dual summits, saying "lessons learned in the past" show such measures were necessary to protect leaders and delegates.

"That is part of the obligations and the responsibilities of holding such summits," Cannon said.

Afghan progress 'critical': Obama

Earlier in the day, Obama and British Prime Minister David Cameron emerged from bilateral talks on the sidelines of the summit with a joint message that the troubled Afghanistan war must show progress this year.

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"This period that we are in is going to be critical," Obama told reporters.

Added Cameron: "Making progress this year, putting everything we have into getting it right this year is vitally important."

The two leaders travelled to Toronto from Huntsville on Obama's marine helicopter, which landed at the foot of the CN Tower.

With files from The Canadian Press and The Associated Press