G8 nations seek sustainable economic expansion

ST PETERSBURG, Russia, June 10 (Reuters) Finance ministers from the Group of Eight (G8) economic powers were set to appeal today for solidarity with fast-growing economies such as China to nurture non-inflationary economic growth worldwide.

Meeting in St Petersburg, the ministers were set to issue a statement of confidence in economic growth in 2006, highlighting fears nonetheless over high oil prices, inflation or instability from ''imbalances'' such as a huge US trade deficit.

''Global growth remains strong and is gradually becoming more broadly based. However, downside risks from high and volatile energy prices and widening global imbalances remain,'' they were to say in an communique after talks in Russia's second city.

The two-day meeting, preparing a mid-July summit, came at a time of mounting interest rates and fears in financial markets that high oil prices are sparking wider inflation that could spoil one of the best years of growth in decades.

Global growth is forecast by the International Monetary Fund to grow 4.9 per cent this year, the best since 1976 bar what was an exceptionally strong 2004, with growth now propelled to a much greater extent by rising stars such as India and China.

''We discussed the current situation in energy markets and noted that high oil prices may have a larger adverse impact on the global economy going forward,'' the communique, according to a draft obtained by Reuters, was set to say.

China is now the world's second largest oil consumer after the United States and Finance Minister Jin Renqing was among several representatives of fast developing countries asked to attend part of the deliberations in a sunny St Petersburg.

The communique was to be signed by meeting host Russia plus the United States, Canada, Japan, Germany, Britain, France and Italy - the G8 countries -- at a time when oil prices are near 70 dollar a barrel double the price of two years ago.

Ministers from those countries were due to meet colleagues from Brazil, China, South Korea and India after a dinner yesterday and Swan Lake ballet thrown on by the Russian hosts.

''We call for concerted actions by both energy-producing and energy-consuming countries to facilitate investment in the energy sector, improve energy efficiency and promote greater transparency in the energy market data,'' the draft said.

MORE REUTERS KD KP0953