NUSA DUA, Dec 10 (AFP) - The leaders of Japan and Indonesia on Thursday urged negotiators at UN climate talks in Copenhagen to clinch a deal and agree to bold targets for cutting carbon emissions.

Japanese Prime Minister Yukio Hatoyama also offered low-interest loans worth 425 million dollars to help mitigate the effects of rising temperatures in Indonesia, one of the developing countries expected to be worst hit.

Hatoyama and Indonesian President Susilo Bambang Yudhoyono signed off on the assistance package on the sidelines of a regional democracy forum on the Indonesian resort island of Bali.

"We should make certain that COP15 (the Copenhagen talks) will not fail, so the two of us have come up with very bold targets," Hatoyama told reporters after the talks.

He said the two Asian countries -- one a major economic power and the other a potential power of the future -- had set a benchmark for carbon reduction targets and would "cooperate in order to involve the major emitters".

Hatoyama has announced that his government will seek to cut Japan's carbon emissions by a quarter by 2020 from 1990 levels, the most ambitious mid-term target set so far by a large, advanced economy and the first to meet a threshold set by UN scientists to avoid catastrophic temperature rises.

Yudhoyono has pledged to slash Indonesia's emissions by 26 percent from 2005 levels by 2020.

Details have been sketchy about how both countries plan to achieve their goals, but Hatoyama said they were "very achievable".

Indonesia is generally considered the third biggest emitter of greenhouse gases after China and the United States, largely due to the rampant destruction of its vast forests for timber products and palm oil plantations.

The Copenhagen talks, under the 192-nation UN Framework Convention on Climate Change, aim to craft a post-2012 pact for curbing the heat-trapping gases that drive perilous global warming.

A Japanese official travelling with Hatoyama said the loans, amounting to 37.44 billion yen, would "support the government of Indonesia's efforts for measures against climate change".

These included reducing carbon emissions and "strengthening adaptability to bad effects of climate change".