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By Anna Willard
GOTHENBURG, Sweden, Oct. 1 (Reuters) - Euro zone officials complained on Thursday of too much volatility in currency markets after a wide-ranging discussion on exchange rates to prepare a message they will take to G7 talks in Istanbul.
The regular meetings of G7 finance ministers and central bankers usually include a discussion on currency policy and the comments from European officials left little doubt that it is a subject they want to keep on the agenda in Turkey this weekend.
EU Economic and Monetary Affairs Commissioner Joaquin Almunia told Reuters Thursday's meeting of Eurogroup officials would prepare a joint position for the G7.
"Well, recently the euro has appreciated and we will prepare also the position of the euro area (on this) vis a vis the next summit, the next meeting of the G7 in Istanbul," he said.
The euro
The single currency has appreciated 4.35 percent against the dollar so far this year, causing pain for euro zone exporters.
European Central Bank President Jean-Claude Trichet, who will also attend the G7, speaking after the meeting said too much movement in foreign exchange markets was a bad thing.
"There is a very strong sentiment that we have a shared interest in a strong and stable international financial system, that excessive volatility and disorderly movement in exchange rates has adverse implications for economic and financial stability," he said.
Eurogroup chairman Jean-Claude Juncker said the discussion at the meeting on exchange rates had been "wide-ranging".
CHINA PIVOTAL
The G20 grouping is set to take on more importance in the managing of the world economy raising questions about whether the G7, the traditional forum for exchange rate negotiation, is still a useful forum for discussion.
The G20 comprises the leading developed and developing economies. The G7 contains the leading developed economies and so does not include China, which some officials argue must be part of any global exchange rate discussion.
"It's not the volatility of the euro, it's the volatility of the dollar that's the problem, and the relatively inflexible exchange rate policy in China. This is probably a structural question," Slovenian Finance Minister Franc Krizanic told Reuters.
Asked if the dollar should be stronger: "No, I don't think it should be stronger. I think the renminbi should be convertible and balanced, not deeply depreciated as it is now."
At the Pittsburgh G20 summit, leaders agreed on the need to rebalance the world economy, which officials say implies a discussion on exchange rates. However, the G20 made no official mention of currencies, meaning the focus has turned to Istanbul.
The G7 usually issues a communique at the end of its meeting which includes a line on currencies but it is not certain there will be a statement this time.
Some European countries are pushing hard for a discussion on currencies. French Economy Minister Christine Lagarde on Sunday echoed comments from President Nicolas Sarkozy in August.
"It is out of the question that the euro pays the bill for an adjustment between the dollar and the yuan," she said. (Additional reporting by Niklas Pollard, Mia Shanley, Veronica Ek in Gothenburg and Jamie Mcgeever and Emelia Sithole-Matarise in London) (Editing by Mike Peacock)