Hundreds of police and military officers patrolled the streets of the US city of Pittsburgh, Pennsylvania, and were on high alert behind steel and concrete barricades as world leaders kicked off the two-day Group of 20 (G20) summit.
Outside the convention centre where the summit was being held, at least 500 protesters carried anti-capitalist signs and chanted: "Bankers, bankers, watch your back, we don't protest, we attack."
The demonstrators were a motley group of self-proclaimed anarchists, dressed in black and waving flags of the same colour, those demanding a free Tibet wearing yellow, monks from Myanmar in maroon robes and others waving red flags and banners that said: "Imperialistic capitalist meeting in progress. Quiet please."
About a dozen Greenpeace activists were arrested after rappelling from a bridge and unfurling a banner, the Pittsburgh Post-Gazette newspaper reported.
The mood inside the centre was more sombre, as US Treasury Secretary Tim Geithner said on Thursday that he expects the leaders of the world's leading economies to reach agreement on financial reforms at the summit.
There is a strong consensus on the framework for reform, including higher capitalisation of banks, reforms in executive pay and stronger regulation of hedge funds and derivatives, Geithner said.
He urged leaders to act before the crisis is forgotten.
Swedish Prime Minister Fredrik Reinfeldt, whose country holds the European Union's rotating presidency, said: "When it comes to financial market regulations, we're very worried about the fact that banks seem to be returning to business as usual."
He said: "The idea that banks should be allowed to keep profits for themselves but extend the bills for losses to the taxpayer will not be accepted."
European Commission chief Jose Manuel Barroso said: "We can't let financial markets return to the same behaviour as before."
There had been grumblings in foreign capitals ahead of the meeting, with the European Union saying it believes the US is not serious about reforming its regulatory system and needs to map out a clear "exit strategy" for its massive stimulus measures.
The EU is pushing for more stringent regulations of the markets and restrictions on executive compensation.
China has concerns about Washington's skyrocketing budget deficit, which will top 11 per cent of US economic output this year.
Geithner said he has seen signs of the beginnings of a recovery from the global recession.
"This is encouraging, but we have a ways to go," he said.
Germany, France and Japan all returned to growth in the second quarter of 2009. The United States is widely expected to follow suit in the coming months. China, India, Brazil and other emerging economies have seen smaller-than-expected fallout from the crisis.
As the deliberations continued at the summit, heavily-armed police carrying plastic shields and batons used tear gas to disperse dozens of demonstrators - wearing bandanas and gas masks - outside the venue.
More than 4,000 police have been called into service during the summit in the city of 300,000.