UPDATE 2-G8 sees downside economy risks, prods China on yuan

(For more G8 summit stories, click on [G7/G8]) (Adds U.S. and Japanese comments in paragraphs 5-8)

By Yoko Nishikawa and Alan Wheatley

TOYAKO, Japan, July 8 (Reuters) - The Group of Eight industrial nations expressed strong concern on Tuesday about sky-high food and oil prices, which they said posed risks for a global economy under serious financial strain.

In a statement released on the second day of the group's three-day annual summit, the G8 made a veiled call for China to let the yuan's tightly controlled exchange rate CNY=CFXS appreciate to help reduce global financial imbalances.

"In some emerging economies with large and growing current account surpluses, it is crucial that their effective exchange rates move so that necessary adjustment will occur," the G8 said in the statement, without naming any country.

The inclusion of the word "some" marked a subtle difference in wording from last year's G8 communique, which referred to the need for emerging economies in general to let their effective, or trade-weighted, exchange rates rise in value.

The G8 made no other mention of currencies in its communique, but a senior U.S. official said President George W. Bush restated his support for a strong dollar during the talks.

"The president of course reaffirmed his interest in a strong dollar, and his commitment to a strong dollar," Dan Price, Bush's assistant for international economic affairs, told reporters. "There was a general discussion of exchange rates."

Financial markets, which had low expectations of the G8 meeting, shrugged off the comments. FXNEWS FINEWS