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Last Updated: Saturday, 10 June 2006, 13:56 GMT 14:56 UK
Cautious optimism at G8 meeting
Finance ministers at the G8 summit
The meeting of finance ministers was a precursor to a full G8 summit
Finance ministers from the G8 group of industrialised nations say the global economy has remained strong.

But the ministers, who were meeting in the Russian city of St Petersburg, said they were concerned about the risk from high and volatile energy prices.

In a statement, they said greater international co-operation was needed to ensure the global economy was not harmed by unstable prices.

The meeting preceded the summit of G8 leaders which takes place in July.

Energy security

The ministers also underlined the need for the diversification of sources to ensure future energy security.

Demonstrators against the G8 in St. Petersburg
G8 meetings never fail to provoke strong feelings among opponents

They called on more transparency and greater investment, so that energy supplies and prices could become more predictable.

Concerns were raised last winter about Russia's dominance of the European energy market after Moscow turned off gas supplies to Ukraine.

Russia now rivals Saudi Arabia as the world's largest energy exporter, but the disagreements with Ukraine last year caused international concern about relying on it as an energy supplier.

Western nations say Russia should open up its own energy resources and pipelines because more transparency and more competition will ensure cheaper, stable supplies.

Russia says it is a reliable partner and wants to buy energy distribution networks in Europe.

Trade imbalance

Other issues which dominated the agenda were rising inflation and widening global imbalances, particularly in trade.

Oil pump
The high oil prices boost petrol costs and crimp consumer spending

Economists also worry that the huge US trade deficit - and corresponding surpluses in China, Japan and some oil producing countries - might cause sharp falls in the US dollar and wider economic problems as a result.

Britain's finance minister Gordon Brown said imbalances were leading to protectionist policies in some countries which could harm future global trade.

In a communique released after the meeting, the ministers said, "We agreed on the importance for global growth of an ambitious outcome from the Doha Development Round and recognise that urgent progress is needed for its achievement."

The Doha Development Round began in 2001 and was aimed at opening up Western markets to poor countries.

But global trade talks have stalled over issues such as tariffs and subsidies and access to markets.

Brazil's finance minister said more needed to be done to break the stalemate.

"Both Brazil and China have shown willingness to be more flexible; Brazil with industrial products, China on services. But this will not take place unless the developed countries have a stronger commitment to liberalise their economies on trade," Guido Mantega said.

Counterparts and officials from Australia, Brazil, China, India, Nigeria and South Korea also took part in discussions.

The two-day meeting was laying the groundwork for the summit of G8 leaders which will take place in July in St Petersburg.

Why ministers are worried about high energy prices

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