Group of Seven finance ministers and central bankers said global economic growth was now "more balanced" and that the performance of the major economies "remains favorable." The G7 -- Britain, France, Canada, Germany, Italy, Japan and the United States -- in addition appealed for "vigilance" on hedge funds, a trillion-dollar industry that has grown strongly and rapidly in recent years.

But in the most eagerly anticipated section of its final statement here, the G7 stressed that "excess volatility and disorderly movements in exchange rates are undesirable for economic growth."

"In emerging markets with large and growing current account surpluses, especially China, it is desirable that their effective exchange rates move so that necessary adjustments will occur," it continued.

China's key trading partners, notably the United States, have long called on Beijing to allow its currency, the RMB or yuan, to float more freely on exchange markets. European and US officials contend that an undervalued yuan gives Chinese exports an unfair advantage on world markets.

EU-US divide over yen

European officials at the talks in Essen had been looking for action specifically on the Japanese yen, which has lost 9 percent of its value against the euro since April and is seen as a threat to euro-zone exports.

But disquiet in the euro zone is not shared in the United States, where US officials contend that the value of the yen reflects Japanese economic fundamentals and is affected by legitimate market forces.

The United States, therefore, appeared to lend support to Japan's resistance to any specific allusion to the yen in the final statement.

Elsewhere the G7 offered a generally positive assessment of global economic prospects.

"In our economies, performance remains favorable," the ministers said.

The United States economy was "experiencing solid activity, while adjusting to a more sustainable growth path," the statement continued. Canada and Britain "remain on a strong and balanced growth path. The euro area is experiencing an increasingly broad-based upswing. Japan's recovery is on track and is expected to continue."

"Amid lower energy prices and moderating inflationary pressures, risks have abated," the statement said.

Call for vigilance on hedge funds

On another hot button issue here the G7 called attention to hedge funds, which Germany had wanted to see subjected to tighter regulation given their volatility and capacity to upset the global financial system.

"Given the strong growth of the hedge fund industry and the instruments they trade, we need to be vigilant," the statement said.

Germany has repeatedly expressed concern over potential risks to financial stability from hedge funds, highly speculative and aggressive investment instruments that are estimated to manage $1.4 trillion (1.1 trillion euros) in assets worldwide.

Berlin has long campaigned for increased transparency and even regulation of the largely uncontrolled sector. But it has been forced to scale back its ambitions in face of skepticism in the United States and Britain, where most of the funds are based.

In its final communique, the G7 said that hedge funds had "contributed significantly to the efficiency of the financial system."

"Nevertheless, the assessment of potential systemic and operational risks associated with these activities has become more complex and challenging," it said.