* G20 countries worry about weak growth
* Concerns about possible U.S. tax hikes and spending cuts
* IMF says austerity commitments have evolved
* Talks on new targets to continue in early 2013
MEXICO CITY, Nov 5 (Reuters) - The world's leading economies gave themselves a bit more wiggle room on Monday to meet targets for cutting budget deficits rather than risk worsening a slowdown in many countries, chief among them the United States.
Meeting a day before the U.S. presidential election, which is being disputed largely on tax and spending issues, the Group of 20 countries worried that previous commitments to cut in half the budget shortfalls of advanced economies by the end of next year might hurt the struggling global economy.
``In light of the weak pace of global growth, they will ensure that the pace of fiscal consolidation is appropriate to support the recovery,'' G20 policymakers said in a communique after a two-day meeting in Mexico.
The target for cutting deficits was agreed at a summit in Toronto in 2010, when the global economy seemed to have gotten past the devastating financial crisis of the previous two years.
It now looks out of reach for some economies, including the United States, as growth has slowed.
``The objective is for 2013 and there is a slight tendency to overshoot,'' said Christine Lagarde, the International Monetary Fund's managing director. She noted the language on fiscal issues ``has evolved'' and took account of situations in different countries.
While the United States needs to bring its deficits under control -- its budget gap surpassed $1 trillion for the fourth year in a row in fiscal 2012 -- many G20 countries are more worried about a barrage of tax hikes and spending cuts due to take effect from Jan. 1.
They were penciled in last year to show Washington could tackle its deep budget problems. But the so-called ``fiscal cliff'' could tip the U.S. economy back into recession next year, and hurt world output, unless Congress cuts a deal quickly after the presidential and congressional elections on Tuesday.
TIPPING POINT FEARS
Chile's finance minister, Felipe Larrain, said there was an assumption a U.S. deal would be done. ``If we're not able to resolve the cliff, that could be the tipping point for a much more complicated scenario in the world economy,'' he told Reuters.
The G20 communique said the United States ``will carefully calibrate the pace of fiscal tightening to ensure that public finances are placed on a sustainable long-run path while avoiding a sharp fiscal contraction in 2013.''
In a bid to show their commitment to controlling their finances over the long term, advanced G20 countries will come up with ``credible and ambitious'' debt targets for beyond 2016, the existing target for them to stabilize their debt. Those new targets will be discussed by G20 leaders next year.
Alan Ruskin, global head of G10 FX strategy at Deutsche Bank in New York, said the policymakers seemed to want to show they were serious about their long-term fiscal rigor while easing off a bit on austerity for now.
``The U.S. is putting out a message that it wants to be credible in the long term but in the short term it believes growth will do more good,'' he said.
One idea discussed in Mexico City was to focus more on the so-called structural deficits of countries with budget problems that could exclude the costs of recession, such as higher unemployment and welfare costs and lower tax revenues.
The IMF's Lagarde said budget tightening should be ``structurally targeted rather than fixated on nominal targets.''
Germany maintained its insistence that austerity is the best way to restore confidence and underpin long-term growth.
``A reduction of excessive public debt is unavoidable for sustained growth,'' German Finance Minister Wolfgang Schaeuble said, noting Germany was hitting its deficit targets. ``With all due modesty, we would urge others to meet their own obligations.''
ELEVATED RISKS STILL FOR WORLD ECONOMY
The G20's consensus of four years ago, which helped stave off the risk of a new depression, has given way to persistent differences over issues such as spending to boost growth and the right pace of belt-tightening to tackle high debt levels.
The global economy still faces ``elevated'' risks, including Europe's debt crisis - centered on Spain and Greece - and potential problems in Japan, the communique said.
``Global growth remains modest and downside risks are still elevated,'' the communique said, pointing also to possible delays in implementing policy announcements in Europe, securing funding for this year's budget in Japan, and weaker growth in some emerging markets.
The wording on Europe referred to differences within the euro zone over how to build a banking union to bolster its shaky financial system, during 2013.
The G20 also recommitted to implementing tough new bank capital rules on time. The rules, known as Basel III, are the world's response to the financial crisis and are set to be phased in starting in January.
Regulators in the United States and Europe, home to many of the world's largest banks, have not yet finalized their versions of the rules. That had prompted speculation that the timetable could be pushed forward.
Few expected major agreements in Mexico with heavyweights such as U.S. Treasury Secretary Timothy Geithner, European Central Bank chief Mario Draghi and top Chinese officials all skipping the meeting. Geithner is expected to stand down after the U.S. election, even if President Barack Obama is re-elected.