Donald Trump and Xi Jinping have been urged to reach a trade deal or risk setting the global economy on a downward path as world leaders gathered in Japan for the G20 summit.

Russian president Vladimir Putin, Indian prime minister Narendra Modi and European president Jean-Claude Juncker heaped pressure on the two superpowers on Friday to settle their differences when they meet on the sidelines of the Osaka summit on Saturday.

But financial markets fell across Asia on Friday amid growing fears that the talks will fail to break the logjam and see the US president carry out his threat of additional tariffs on Chinese goods.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.3%, with weakness in Chinese equities weighing on the broader region. The Shanghai composite was down nearly 1% while Japan’s Nikkei stock index was 0.55% lower.

Trump has adopted a belligerent position ahead of the meeting, saying that China was desperate to reach a deal because its economy was “going down the tubes”.

Xi hit back on Friday by saying that some developed countries were taking protectionist measures that are leading to trade conflicts and economic blockade - calling them the biggest risk of the increase in instability in the global economy.

“All this is destroying the global trade order,” he told leaders of the so-called Brics nations (Brazil, Russia, India, China and South Africa) in Osaka.

Japan’s prime minister, Shinzo Abe, urged G20 leaders to work together to defuse trade and political tensions, describing them as threats to global economic growth and stability.

Abe, eager to avoid Japan’s first G20 summit descending into rancour, said “free and open” economies were critical to peace and prosperity, adding that no one would benefit from retaliatory moves over trade.

Trump has also threatened Japan over what he calls its unfair advantage on trade. Abe, who hosted the US president on a lavish state visit last month, began the summit by handing him a document outlining Japanese carmakers’ recent investments in the US.

The Guardian