(Adds details from statement, background)
By Sumeet Desai
ISTANBUL, Oct 3 (Reuters) - The Group of Seven rich nations on Saturday said too much volatility in foreign exchange markets could hurt the global economy and financial system, and again welcomed China's pledge to move toward greater currency flexibility.
The language on currencies in a final communique issued by the G7 finance ministers and central bankers after a meeting in Istanbul was nearly identical to a statement released after their last meeting in April.
"Excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability. We continue to monitor exchange markets closely, and cooperate as appropriate," the communique said.
Some European nations had wanted to change the G7 currencies statement to reflect their concerns about a strengthening euro.
But in the end policymakers agreed on their usual language and maintained the softer tone on China's yuan, or renminbi, first adopted in February.
"We welcome China's continued commitment to move to a more flexible exchange rate, which should lead to continued appreciation of the renminbi in effective terms and help promote more balanced growth in China and in the world economy."
G7 countries are concerned that an undervalued yuan is fueling Chinese exports at the expense of their own, contributing to an uneven global economy where Beijing runs huge trade surpluses and the United States large deficits.
There was little in the communique on the future of the G7 itself, which had been a source of much speculation after the wider G20 body -- a group that includes China and other developing economies -- declared itself the premier forum for global economic policymaking last week.
The G7 said it saw "signs of global economic recovery and continued improvement in financial market conditions."
But it stressed: "There is no room for compacency since the prospects for growth remained fragile and labour market conditions are not yet improving."
The communique said that economic life-support packages would be kept in place until recovery is assured but promised to design cooperative and coordinated exit strategies for use later. (Reporting by Sumeet Desai)