Group of Seven (G7) leaders hold a final day of talks at their annual summit on Friday, with China topping the agenda before Pope Francis puts in a historic appearance to discuss artificial intelligence (AI).

The pope will be joined by 10 other heads of state and government, including the prime minister of India and the king of Jordan, as the G7 throws open its doors to outsiders to show it isn't an aloof, exclusive club.

During the first day of their meeting in southern Italy, the G7 nations agreed on a deal to provide $50 billion of loans for Ukraine backed by interest from frozen Russian assets - hailing the accord as a powerful signal of Western resolve.

Although many details still need to be worked out, G7 members - the United States, Canada, Japan, Germany, France, Italy and Britain - and the European Union (EU) are expected to contribute to the loan, with cash to reach Kyiv by the end of the year.

"This is a very historic step we're taking today," said German Chancellor Olaf Scholz.

"It is also a clear signal to the Russian President (Vladimir Putin), that he can't just sit this out and hope that fiscal problems in a country that backs Ukraine will one day let him win this war," he added.

While Ukraine dominated the first day of talks, China will be the key issue on Friday morning.

Leaders are expected to voice concern about China's excess industrial capacity and its support for Russia.

The U.S. this week imposed fresh sanctions on China-based firms supplying semiconductors to Russia, amid worries over Beijing's increasingly aggressive stance against Taiwan and run-ins with the Philippines over rival maritime claims.

"China is not supplying weapons (to Russia) but the ability to produce those weapons and the technology available to do it, so it is in fact helping Russia," U.S. President Joe Biden told reporters at the summit after signing a bilateral security pact with Ukrainian President Volodymyr Zelenskiy.

On Tuesday, the EU announced it would impose extra duties of up to 38.1% on imported Chinese electric cars from July, risking retaliation from Beijing, which vowed to take measures to safeguard its interests.

However, there are differences within the G7 over how to counter Chinese state subsidies, with Europe anxious to avoid an all-out trade war with Beijing.

Papal Audience

Besides his speech on AI, the Pope will hold multiple bilateral meetings, including with Biden, Zelenskiy and Turkish President Tayyip Erdogan.

"It is a historic day. We will welcome the Holy Father. It is the first time for a pontiff at a G7. I am proud it will happen under the Italian presidency," Italian Prime Minister Giorgia Meloni told reporters on Thursday.

Leaders will also discuss immigration, a crucial issue for Meloni who is pushing Europe to help her curb illegal flows from Africa and has launched a flagship plan to boost development in the continent to tackle the root cause of the departures.

Many of the leaders will leave Italy late on Friday, including Biden, and Meloni said they had already agreed on the summit's conclusions, to be approved at the end of the day.

On Saturday, there will be room for bilateral meetings for those staying on, ahead of a final news conference from Meloni.