By Jeremy Lovell

LONDON, June 4 (Reuters) - This week's Group of Eight summit in Germany must give clear direction on tackling global warming and pave the way for new world negotiations at a U.N. meeting in December, major investors said on Monday.

Their call, in an open letter to the heads of the G8, came as the United States continued to reject attempts by G8 president Germany to reach agreement on tough targets and timetables for cutting climate-warming carbon emissions.

"Climate change brings significant opportunities and risks for us as investors," said Roderick Munsters of APB Investments, one of the 17 signatories of the letter.

"To finance the solutions and manage the risks we need a strong policy framework that tackles carbon emissions effectively while providing transparency and stability for investment decision-making. The G8 has a vital role to play in providing this."

Diplomats hope the June 6-8 summit in the Baltic resort of Heiligendamm will send a clear signal to start talks to extend the Kyoto protocol -- the only global deal on cutting carbon emissions from burning fossil fuels -- at a U.N. meeting on the Indonesian island of Bali in December.

But in a widely-criticised declaration, U.S. President George W. Bush said this week he wanted to convene a group of the worst 15 emitters to formulate voluntary goals by the end of 2008, in effect circumventing the G8 and the U.N. processes.

Washington rejected Kyoto in 2001, arguing it would pose economic problems as it was not binding on booming emerging emitters like China and India, whose leaders will attend the summit along with those of Mexico, Brazil and South Africa.

The letter from the Institutional Investors Group on Climate Change, which has 3 trillion euros of assets under management, said the meeting should agree key elements for a renewed Kyoto, whose first phase ends in 2012.

This should give the signal to the Bali meeting to agree a negotiating mandate and set a deadline for a post-2012 deal by the end of 2009, it said.

Other key elements of this deal should include agreement on a stabilisation target for temperature rises or greenhouse gas concentrations in the atmosphere and absolute emission reduction targets with sanctions for non-compliance.

It must tie in developing nations, expand trading in carbon emission allowances, support energy efficiency programmes, raise the share of renewable energy, reduce deforrestation and tackle the effects of unavoidable climate change, the letter said.

Scientists say global average temperatures will rise by between 1.8 and 4.0 degrees Celsius this century due to carbon emissions, causing floods, famines and violent weather, putting millions of lives at risk and causing political instability.

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