The Clinton administration and Japan reached a milestone trade agreement Friday that will eventually allow U.S. companies to more effectively compete in the Japanese telecommunications and financial services markets - a pact that one U.S. government official said would be worth "billions and billions of dollars" to American industry.

The agreement, reached after a marathon negotiating session on the eve of an economic summit of the world's wealthiest industrial nations, will also further open the Japanese pharmaceutical, medical equipment and housing construction markets to U.S. companies. In total, the accord will allow U.S. companies to better compete for an estimated $246 billion in business and for management of the $10 trillion in the Japanese savings pool, officials said.The agreement was announced by the White House moments after President Clinton met at his hotel with Japanese Prime Minister Ryutaro Hashimoto in the first of a series of bilateral meetings with world leaders. Heading into the private session, Clinton told reporters, "On balance, the American people should feel good about our relationship with Japan and very good about the leadership Japan has been exercising in the world."

Afterward, Clinton aides lauded the pact - which still faces approval by the Japanese legislative body, the Diet - as a boon to American industry, and specifically mentioned Boston-based Fidelity Investments as the type of financial services company poised to benefit from the agreement.

Aides said the agreement will allow Fidelity and companies like it, which are already in the process of setting up shop in Tokyo, to more easily register for business in Japan and extend the scope of business activities. Officials have estimated that the Japanese savings pool of $10 trillion is second only to that of the United States.

"This liberalization of the financial sector is an important achievement," said Richard Fisher, the deputy U.S. trade representative.

After years of trying, Fidelity first won a Japanese license to sell a version of mutual funds in 1995 and opened its first office in Tokyo last year, according to Fidelity spokes-woman Anne Crowley in Boston. The company began selling funds directly to the public less than two months ago, on April 1.

"We had worked with the Bush and Clinton administrations for many years to modify the stringent Japanese regulations governing the investment trusts in Japan by foreign firms," Crowley said.

Administration officials said the pact should help put a dent in the $55.7 billion dollar trading deficit the United States has with Japan. Currently, the United States imports $121 billion in merchandise goods from Japan, while exporting $65 billion.