* Balancing growth and deficit cuts at heart of G20 talks
* Ministers see tough task fine-tuning clashing imperatives
* Canada leads opposition to global banking levy
By Alan Wheatley, China Economics Editor
BUSAN, South Korea, June 3 (Reuters) - Disagreements over how quickly to reduce billowing budget deficits and restore balance to the global economy risk straining high-level Group of 20 talks that started on Thursday.
A plunge in the euro and in global stock markets, triggered by fears that Greece's debt woes could spread to other euro zone countries, has added urgency to the meetings of G20 finance ministers and central bankers in this southern port city.
With officials ruling out agreement in Busan on key financial and regulatory reforms, including a mooted global bank levy, the need to strike the right balance between trimming deficits and sustaining economic growth will take centre stage. "Countries with high budget deficits need to make sure they can deal with those deficits," Britain's finance minister, George Osborne, said in Beijing before flying to Busan.
"Surplus countries also need to play their part contributing to global growth and that will be one of the big topics for discussion in South Korea," he said.
U.S. Treasury Secretary Timothy Geithner said the need to get the balance right was a "shared imperative" recognised by all G20 members.
"As the IMF says, we want those fiscal reforms to happen in a way that's growth-friendly," Geithner told reporters in Washington on Wednesday. "Some countries are in a very strong position. Some countries need to move much more quickly."
Another G20 official put the need for coordinated fiscal tightening more graphically: the euro zone crisis had shown that some countries would have to withdraw stimulus earlier than expected, but not everyone should run to the other side of the boat at the same time, the official said.
EXIT STRATEGIES
G20 nations to date have merely discussed the timing of unwinding the super-loose monetary and fiscal policies they launched to cushion the crisis, but the Bank of Canada on Tuesday became the first G7 nation to raise its key interest rate.
"I would think we are coming to a time where we could move forward with the implementation of exit strategies," Canadian Finance Minister Jim Flaherty said in Beijing on the way to Busan.
Deputy ministers were holding preparatory talks on Thursday, a day ahead of the start of the main meeting, which is itself clearing the ground for a June 26-27 G20 summit in Toronto.
Putting down a firm marker, Flaherty restated Canada's firm opposition to the idea of a bank levy to pay for any other financial bailout.
Flaherty said G20 countries needed to "keep our eye on the ball" in reforming the financial sector, focus on capital requirements and steer clear of a global bank levy.
He said he had written to his G20 counterparts last week detailing Canada's proposal of "embedded contingent capital" to shore up banks' balance sheets as an alternative to a global tax.
The G20, the premier international economic policy coordination forum, brings together the world's systemically important rich economies and emerging markets. Together they account for 85 percent of global output.
Anxious to soothe global markets, the group is expected to back the euro zone's deficit-cutting strategy, even though China and Brazil fret that the bloc has not acted more decisively.
"The euro zone crisis is of great concern and I think I'm not saying too much when I say it came up in the meetings I've had here. There's clearly a lot of Chinese concern about the euro zone," Osborne, Britain's chancellor of the exchequer, said after talks with Vice Premier Wang Qishan.
REBALANCING
However, differences of emphasis on how fast to plug the hole in public finances are close to the surface within the euro zone itself.
French Finance Minister Christine Lagarde brushed off concern in some G20 capitals that Germany is preparing fresh belt-tightening even though its deficit, while above 5 percent of GDP, is modest by European standards.
Speaking to reporters in Paris on Wednesday, Lagarde said removal of the economic stimulus that governments put in place to combat recession was all a matter of "fine-tuning".
But she added: "We need to be careful to avoid brutal shifts."
Fiscally conservative Germany, the largest euro zone economy, is considering raising value-added tax to the full rate of 19 percent on certain items that now benefit from a lower rate of 7 percent, according to sources in the coalition government.
Beyond fire-fighting on the deficit front, ministers will discuss the medium-term growth framework -- or how to iron out economic imbalances that were a root cause of the 2008-2009 global financial crisis.
Officials said that Canada, the current G20 president, hopes to secure agreement in Toronto on the broad suite of policies needed to reduce these imbalances.
Individual countries would then commit themselves to specific policies at the next G20 summit in Seoul in November. (Additional reporting by Emma Graham-Harrison and Simon Rabinovitch in Beijing, Brian Love in Paris, Louise Egan in Ottawa, Glenn Somerville and Emily Kaiser in Washington; Editing by Tomasz Janowski)