* Dollar slides, G7 reiterates familiar stance on FX
* Global shares rise, risk appetite improves
* U.S. service sector grows for first time in a year
* Aussie gains on speculation of rate hike this week (Updates prices, adds comments)
By Wanfeng Zhou
NEW YORK, Oct 5 (Reuters) - The dollar fell against major currencies on Monday after a meeting of Group of Seven finance chiefs reinforced the market's view policy-makers are comfortable with a gradually weakening dollar.
Gains in global stock markets and data showing the U.S. service sector expanded in September for the first time since August 2008 boosted risk appetite and diminished safe-haven demand, which also pressured the dollar.
Saturday's G7 statement offered nothing new to allay concern over dollar weakness despite heated discussions of the issue in the run-up to the meeting. Traders bet on further dollar declines to help redress imbalances between net consumers like the United States and savers like China.
"What's weighing on the U.S. dollar right now is really a lack of consensus with respect to the dollar's direction coming out of the (G7) meeting," said Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto.
With the communique seen as an acceptance of the dollar's value where it is now, currency investors focused their attention on the broader risk sentiment in markets, he said.
"With gold trading higher and equities posting gains, there's risk on the table and risk tends to imply U.S. dollar weakness," Spitz added.
In midday New York trading, the euro climbed 0.6 percent to $1.4650.
The need to rebalance the global economy does not at all mean the dollar should depreciate against the euro, European Central Bank President Jean-Claude Trichet told Reuters television on Monday.
The ICE Futures U.S. dollar index, a measure of the greenback's performance against six major currencies, was down 0.3 percent at 76.756.
RISK APPETITE
The Institute for Supply Management's services index rose to 50.9 last month from 48.4 in August, above expectations for a rise to 50.0, which is the dividing line between growth and contraction.
The data came after a report on Friday showed U.S. employers cut far more jobs than expected last month, bolstering expectations the Federal Reserve will keep interest rates at near zero for a prolonged period.
"This is a good way to start off the week after a sour nonfarm payrolls," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York. "We need to see the service sector doing better because it's such a big part of the economy."
Worries that the United States may be lagging other countries in the recovery process sparked by the jobs report have weighed on dollar sentiment, said Boris Schlossberg, director of currency research at GFT Forex in New York.
"There's a sinking realization that the problems with the U.S. economy are just structurally so much more severe than anywhere else," he said. "That means on a relative basis, everybody outgrows the United States and this makes it very unappealing to own dollars."
The dollar fell 0.3 percent to 89.55 yen, above a recent eight-month low of 88.23 yen hit on electronic trading platform EBS. Japanese Finance Minister Hirohisa Fujii at the weekend said Japan would take action against what it perceived as excessive, one-sided moves in the yen.
The Australian dollar rose 1.4 percent to US$0.8772, after two influential columnists wrote the RBA would probably raise rates to 3.25 percent from a record low 3.0 percent at Tuesday's policy meeting.
Still, many in the market expect the RBA is more likely to raise the cash rate from 3.0 percent in November.
The ECB and the Bank of England will also announce policy decisions this week. Both are seen holding rates on Thursday. (Additional reporting by Steven C. Johnson; Editing by Andrew Hay)