UPDATE 2-Putin and Obama set to spar over Syria arms at G8
* Obama faces international row over Syria at G8
* Putin describes Syrian rebels as cannibals
* Pessimistic Harper says Putin supporting Syrian "thugs"
* Cameron red faced over British spying report
* Abe, Merkel to tackle monetary policy
(Recasts, changes dateline, adds report on British spying on G20 leaders)
ENNISKILLEN, Northern Ireland, June 17 (Reuters) - U.S. President Barack Obama faces what could be a frosty G8 meeting with Vladimir Putin on Monday after the Russian leader clashed with the West over plans to arm Syrian rebels fighting President Bashar al-Assad.
At their first private face-to-face meeting in a year, Obama will try to convince Putin to bring Assad to the negotiating table but the Russian leader has shown little sign of compromise.
On the summit's eve, Putin described Assad's foes as cannibals who ate their enemies intestines in front of media cameras.
"Are these the people you want to support? Is it them who you want to supply with weapons?" Putin said in London on his way to the G8.
British Prime Minister Cameron, who chairs the summit, acknowledged that there was "a big difference" between the positions of Russia and the West on Syria but he stressed there was also common ground between the world's richest powers.
Other leaders were less diplomatic: Canadian Prime Minister Stephen Harper said that Putin, as Assad's only big-power ally at the G8 table, was supporting thugs.
"We are not, unless there is a big shift in position on his part, going to get a common position with him at the G8."
Obama and Putin are due to meet at about 6:30 pm local time
at the Lough Erne golf resort about 10 km (7 miles) outside the Northern Irish town of Enniskillen.
But Cameron could face some awkward questions at the G8 table after a Guardian newspaper report that Britain spied on officials taking part in two Group of 20 meetings in 2009.
The leaders of the United States, Japan, Canada, Russia, Germany, France, Britain and Italy - representing just over half of the $71.7 trillion global economy - will also discuss the global economy.
MARKET TURMOIL TO FOCUS MINDS
Japanese Prime Minister Shinzo Abe, German Chancellor Angela Merkel and other leaders will likely discuss the role of central banks and monetary policy.
They are likely to say they are not content with progress so far in fixing their economies in the wake of the global financial crisis, according to a draft communique seen by Reuters.
Japan's Abe will use the opportunity to explain his cocktail of fiscal and monetary stimulus known as 'Abenomics' to the leaders as investors try to absorb the implications of a signal by the U.S. Federal Reserve that it may start to slow its money-printing.
Fed chairman Ben Bernanke will not attend. He and his colleagues hold a two-day policy meeting on Tuesday and Wednesday.
Bond yields have climbed and share prices have sagged globally since Bernanke shocked investors on May 22 by saying the bank might 'take a step down' in the pace of bond purchases - a blow to a global economy still growing well below trend due to the after effects of the great financial crisis.
"Japan's decisive moves to reflate its economy will support growth in the near term, but it will need to manage the twin challenge of providing near-term stimulus and achieving longer-term sustainability," the draft communique said.
The version circulated by Britain and seen by Reuters was put together before the recent market turmoil.
The leaders of the European Union and United States are likely to announce the start of formal negotiations on a free trade deal that could be worth more than $100 billion a year to each economy. Negotiators aim to finish their work by the end of next year.
TREASURE ISLAND TAX
Cameron has made tackling tax avoidance - which campaigners say costs about $3 trillion a year - a main part of the formal agenda at the summit.
He has turned up the pressure to clamp down on secretive money flows by pressing Britain's overseas tax havens into a transparency deal and announcing new disclosure rules for British firms.
Representatives of overseas tax havens linked to Britain on Saturday agreed to sign up to an international transparency protocol. Aid campaigners said Britain's action will count for little if the rest of the G8 does not follow suit.
G8 leaders will probably shy away from adopting a measure aimed at curbing tax avoidance by highlighting when companies channel profits into tax havens, and will include a watered-down alternative, according to the draft communique.
Tackling corporate tax avoidance has become a political goal internationally following public anger about revelations over the past year that companies like Apple and Google had used structures U.S. and European politicians said were contrived to minimise the amount of taxes paid.
The draft summit text suggested there will be no agreement on a rule that would force companies to publish their profits, revenues and tax payments on a country-by-country basis.
(Additional reporting by Padraic Halpin in Dublin Writing by Maria Golovnina; Editing by Angus MacSwan)