The European Union plans the switch on Nov. 17-18, barring any technical problems, a European Commission official said. The official said two trial runs on the link would take place before that weekend.

"If those work out well, then the planning is (for) that weekend," the official said. "If it doesn't work, then it will be later."

Under Kyoto, rich countries can meet domestic greenhouse gas emissions goals by buying carbon offsets, or carbon credits, from developing nations.

European businesses can meet EU-imposed emissions limits using either these Kyoto credits or EU carbon emissions permits, called EU allowances (EUAs). Kyoto credits had traded at a discount until now because delivery wasn't possible.

That price discount should now narrow. EUAs for 2008 delivery initially fell 60 euro cents, or 3 percent, on Thursday's news. By mid-afternoon EUAs were trading at 19.25 euros, down 68 cents on Wednesday's close.

"It makes sense, the spread (price difference) between the two was too large," said Seb Walhain, director of environmental markets at Fortis Bank. The spread should now narrow further, he added, offering gains to speculators who sold EUAs.

After the EU-UN market link all carbon credits traded in the EU carbon market and under Kyoto will trade through one registry, called the International Transaction Log (ITL).

But in one complication typical of the teething troubles that the EU's two-and-a-half year old carbon market has suffered, countries will still have to await additional UN approval or "eligibility to trade", before they can trade their Kyoto credits across borders.

That process is seen taking longer than the ITL switch, but Austria, Japan and Switzerland were already at an advanced stage, the UN climate body said on Thursday.

"Austria, Japan and Switzerland are just the first reviews to be finished and we are expecting another 30 or so before the end of the year," the UN's top climate change official, Yvo de Boer, said.

DELIVERY IN DECEMBER

The first major Kyoto contracts under the so-called Clean Development Mechanism (CDM) fall due for delivery in December.

"Having (EU) registries go live on the ITL in November this year clearly has one eye on the delivery of CDM credits under future contracts in December," de Boer said.

So far eight registries had received approval to link with the ITL, and the registries of all the rich countries which face emissions targets under Kyoto should get approval by mid-October 2007, the UN statement said.