A draft of a statement to be issued at the G7 finance ministers' meeting this week says the U.S. economy is moving toward a sustainable growth path but does not yet contain any references to currencies, Kyodo news agency reported on Tuesday.

The statement's comment currencies is still being negotiated, it said.

Finance ministers and central bankers from the Group of Seven nations will meet in Singapore on Saturday.

A Japanese Finance Ministry official said he could not confirm the report.

The draft gives an upbeat assessment on the world economy but says nations other than G7 should meet a shared responsibility to address global imbalances, Kyodo said.

Concerns about global imbalances and the huge U.S. current account deficit were factors behind the dollar's fall to a record low against the euro in the three years to the end of 2004.

Japan's economic recovery is becoming broad-based while accelerated growth in Europe is likely to continue for rest of the year, Kyodo quoted the draft as saying.

The draft statement cites a rise in inflation expectations in some economies and a further increase in energy prices as among potential downside risks to otherwise sound world economic growth, it said.

Japanese Finance Minister Sadakazu Tanigaki said earlier on Tuesday that the section on currencies in the G7 communique will reflect the group's shared view built from past discussions at the forum.

Currencies will be discussed as part of talks on the world economy, but I don't have any preset idea on which currency will be in focus, Tanigaki, who will chair the meeting, told a news conference.

Asked if he saw a need to make a significant change to the previous G7 statement on currencies, issued at its April meeting, Tanigaki said: We cannot say in advance what the communique will say.

But the G7 group has been discussing currency issues for a long time, so our discussion will be based on our common understanding built from those debates, he said.

The G7 statement issued at the April meeting in Washington said the group reaffirmed that exchange rates should reflect economic fundamentals, and that excessive volatility and disorderly movements in exchange rates are undesirable for economic growth.

The G7 finance chiefs called on China at the April meeting to move toward a more flexible exchange rate policy to help cut its growing trade surpluses with the rest of the world. The statement pushed the dollar sharply lower against other major currencies

Japan