COPENHAGEN (Reuters) -- Negotiators facing a deadline today hammered out an initial draft UN climate pact overnight that calls for a two degree Celsius cap on global temperatures and billions in aid for poor nations, sources said.
More than 120 world leaders will attend the final day of the climate talks in the Danish capital to try and strike a deal that would step up international efforts to curb greenhouse gas emissions widely blamed for heating up the planet.
The draft still under discussion proposed limiting a rise in global average temperatures to within two degrees Celsius from pre-industrial levels, the sources, who declined to be identified, told Reuters.
Low-lying countries worried about rising seas want a tougher target of 1.5 degrees. Temperatures have already risen half that level over the past century, the UN climate panel says.
Two sources said the draft pledged rich countries to donate $100 billion annually by 2020 to poor nations to help them adapt their economies and cope with climate change that threatens to bring chaotic weather and crop failures.
Leaders from 26 rich and developing countries met into the early hours today to try and overcome deep divisions that have plagued the negotiations since they were launched two years ago in Bali, Indonesia.
"Leaders are flying in, most have already arrived, and the reason they have decided to come to Copenhagen is because there is a genuine feeling to achieve something important," said Danish Prime Minister Lars Lokke Rasmussen.
"We will meet again in the leaders' group at 8 o'clock [local time, or 0700 UTC]," he told reporters.
The text, which could still change, did not currently mention carbon emissions reduction targets for industrialized nations, one source said.
The two-week talks in Copenhagen have struggled to overcome deep differences over rich nations' targets to cut emissions, mostly from burning fossil fuels, climate funds and action by big developing countries to curb carbon pollution.
A major issue is trying convince China and India, the world's top and fourth-largest carbon emitters, to allow outside scrutiny of pledged steps to curb their emissions.
Rasmussen hopes the leaders' meeting will yield a draft document that all 193 nations attending the UN talks could agree will form the basis of an eventual legally binding climate deal to expand or replace the existing Kyoto Protocol. The United Nations hopes this will be sealed next year.
Kyoto's first phase ends in 2012 and a key focus of the talks is finding a formula that captures stronger action by the United States, other rich nations and big developing countries to avoid dangerous climate change.
The United States never ratified Kyoto.
U.S. President Barack Obama is due to arrive on Friday and is expected to face pressure to pledge deeper emissions cuts. The United States is the world's number two emitter of greenhouse gases.
Obama is expected to meet Chinese Premier Wen Jiabao on the sidelines of the talks, the largest ever climate summit.
Officials said the United States was making progress with China on outstanding issues but could not say whether a deal would result after Obama arrived.
One U.S. official said there was progress on monitoring, reporting and verification requirements by China and other big developing countries on their emissions curbs. China has resisted such requirements.
The United States had helped the mood at the talks on December 17 by promising to back a $100 billion a year fund for poor nations from 2020.
Such funds would be more than all current aid flows to poor nations, a UN official said, and in line with demands put forward for African nations. "That's very encouraging," UN Secretary-General Ban Ki-moon said of the U.S. pledge.
Accord on finance is one part of a puzzle that also includes a host of other measures, such as saving rainforests, boosting carbon markets and stiffening global carbon emissions curbs.
But any deal will have to be agreed by unanimity. Some small island states and African nations -- most vulnerable to climate change -- say they will not agree a weak deal.
"We are moving out of the valley of death. We are beginning to see the outlines of a compromise, helped by the U.S. offer on finance," said Kim Carstensen, head of the WWF environmental group's global climate initiative.