Europe and America have launched talks on a free trade deal that Prime Minister David Cameron believes could add £100 billion to the world economy.

The agreement came as leaders of the world's most powerful countries gathered in Northern Ireland for a G8 summit, which was overshadowed by international tensions over the civil war in Syria.

Mr Cameron spoke privately with Barack Obama – who has said he may arm the rebels seeking to oust the regime of Bashar Assad – ahead of the US president's talks with Russia's Vladimir Putin, Assad's most powerful international backer.

The dramatic gulf between Russia and the West over Syria was laid bare in talks between Mr Cameron and Mr Putin at Downing Street on Sunday, when the Russian president warned the international community to be wary of arming militants who "eat the organs" of their enemies.

Mr Cameron said he was "as worried as anyone" about terrorist and extremist elements in the opposition forces, but insisted it was right to engage with the Syrian crisis and seek to put pressure on both sides to attend peace talks, to discuss a transitional government for the country.

But the Prime Minister was also fighting to keep the world's attentions focused on the economic priorities he has set for the two-day G8 summit in Northern Ireland, particularly the EU/US pact, which he said would be "the biggest bilateral trade deal in history".

He said: "The whole point of this meeting is to fire up our economies and drive growth and prosperity around the world, to do things that make a real difference to people's lives.

"There is no more powerful way to do that than by boosting trade and there is no better way than by launching these negotiations on a landmark deal between the EU and the USA, a deal that could add as much as £100bn to the EU economy, £80bn to the US economy and as much as £85bn to the rest of the world. They mean extra jobs, more choice and lower prices in shops."

Mr Obama promised to make the trade talks, which start next month in Washington and are expected to last up to two years, a priority of his remaining term in office. He said: "America and Europe have done extraordinary things together before and I believe we can forge an economic alliance as strong as our diplomatic and security alliances."