TORONTO (Reuters) - G20 leaders are still discussing how quickly they should commit to cutting deficits, Canada said yesterday after European officials complained that fiscal targets proposed by Ottawa did not go far enough.

Canadian Finance Minister Jim Flaherty told reporters that within the Group of 20 advanced and emerging economies, some required urgent action to reduce budget shortfalls, while others could do so at a more leisurely pace.

"There are some more discussions about what the precise targets would be and that's not a settled matter," Flaherty said before a speech to a business audience.

Canadian Prime Minister Stephen Harper sent a letter to his G20 peers last week proposing an agreement to halve deficits by 2013 and stabilise or start reducing debt-to-GDP ratios by 2016.

The European Union's monetary affairs chief, Olli Rehn, told Reuters in an interview those targets were not ambitious enough for the euro zone.

Flaherty said a key issue for the G20 would be striking the right balance between growth and fiscal consolidation.

"There are clearly some countries, particularly some European countries, that need to fiscally consolidate on an urgent basis," he said.

"And then there are some countries that need to fiscally consolidate, but don't need to do so on an urgent basis, so we need some moderation there. That's the delicate balance that we need to try to strike this weekend beginning with fiscal consolidation among those countries that urgently must do so so that the markets have confidence."

The G20 summit takes place in Toronto tomorrow and Sunday, preceded by a G8 meeting of advanced economies. Flaherty said the most pressing issue for Canada on the G20 agenda was ensuring sustainable economic growth through committing to policy action.

On the Chinese currency appreciation, Flaherty would not say whether he thought a three percent rise against the dollar this year was enough, saying, "The more flexibility the better." A Chinese central bank adviser said yesterday the yuan was likely to rise by three percent against the dollar by year-end if the euro holds its ground against the US currency.