* Japan calls for weaker yen
* France to lead currency discussion in 2011
* China shrugs off calls for change to yuan level
By Tetsushi Kajimoto and Sophie Taylor
TOKYO/PARIS, Jan 7 (Reuters) - Japan called on Thursday for a weaker yen, prompting a sharp slide against the U.S. dollar, and France said it would make currency imbalances a major topic of its G20 and G8 presidencies next year.
China, meanwhile, shrugged off pressure from its major trading partners for a change in the level of the yuan, repeating its line that stability was in everybody's best interest.
The disagreements highlighted the failure of big countries to resolve the currency tensions which were thrown into focus by the global economic crisis, despite calls at a summit meeting in Pittsburgh last September for these issues to be tackled.
Ironing out the imbalances -- principally huge current account surpluses in countries such as China and deficits in the United States and elsewhere -- was seen by many economists as requiring a weaker dollar and a stronger yuan.
More than three months on, analysts say these goals remain distant.
"There has been a general agreement since the crisis broke out that something must be done, but in terms of currency policy no progress has been made at all," said Neil Mellor, currency strategist at Bank of New York Mellon in London.
Newly appointed Japanese Finance Minister Naoto Kan said the yen should be weaker. Such calls have raised fears among policymakers and economists of competitive devaluations that they say could jeopardise economic recovery.
"Many businesses say it is appropriate for the dollar to be around 95 yen for trade, so we must work with the Bank of Japan to bring it to appropriate levels taking into account the various effects currencies may have on the Japanese economy," Kan said.
The dollar rallied against the yen on his comments, helping to boost the U.S. currency across the board, although gains were capped as traders braced for U.S. payrolls data due on Friday.
The yen fell nearly 1 percent to a low of 93.27 per dollar, according to Reuters data, its weakest since September.
Broad dollar strength saw it rise 0.6 percent against a basket of currencies, to 77.956, by 1257 GMT.
France is concerned about currency imbalances and President Nicolas Sarkozy said he would make them a major subject in 2011.
It is the second time in as many days that he has called for currency issues to be at the centre of international talks.
"Currency disorder is a major issue that France will bring up when it presides at the G8 and the G20 in 2011. There cannot be financial, economic and social order until we put an end to currency disorder," Sarkozy told a conference in Paris.
STABILITY
France and Japan are upset about the dollar's weakness but many officials and economists say the key problem is the level of the Chinese yuan, effectively pegged to the U.S. currency.
For a Reuters poll on foreign exchange rates, see
China's commerce minister Chen Deming, speaking in Ankara, said appreciation or depreciation of the yuan would not benefit the world economy at a time when it was starting to recover.
"The Chinese currency, yuan, must definitely preserve its stability. This is good for the world as well," he said.
China's central bank on Wednesday reaffirmed its long-standing position on the yuan, saying it would maintain a stable exchange rate in 2010.
China has effectively re-pegged the yuan at 6.83 to the dollar since its exports dropped sharply with the worsening of the global financial crisis in mid-2008.
The dollar has been the lynchpin of the financial system since 1944 when the Bretton Woods conference agreed on a pegged exchange rate regime with the dollar as the effective reserve currency.
Although this collapsed in 1971, when the dollar gave way to the model of freely-floating currencies, the greenback has remained the favoured international currency.
But the balance of economic power has changed in recent years with the rise of several emerging economies and this has led to calls, including from Sarkozy, for a new system that is less reliant on the U.S. currency. (Additional reporting by Naomi Tajitsu and Jessica Mortimer in London, Stanley White in Tokyo and Hatice Aydogdu in Ankara; writing by Anna Willard and Nigel Stephenson; editing by Stephen Nisbet)