G8 frets over commodity shock

By Glenn Somerville and Eric Burroughs

OSAKA, Japan (Reuters) - The world's richest nations warned on Saturday soaring commodity prices may slice into economic growth, but shrank from offering any plan to calm markets or quell protests over the cost of fuel and food.

Currencies were not discussed in a meeting of G8 finance ministers in Osaka, Japan, after a string of tantalising comments about a weak dollar's role in inflation, and analysts said the currency would likely dip on Monday.

An Italian push for regulation to snuff out speculation in oil futures ran into U.S. and British resistance.

Most ministers appeared more worried about slowing growth in economies hit by a credit crisis than about rising prices, just as most G8 central banks gird up to fight inflation.

"Elevated commodity prices, especially of oil and food, pose a serious challenge to stable growth worldwide, have serious implications for the most vulnerable and may increase global inflationary pressure," the ministers said in a communique.

U.S. Treasury Henry Paulson said costly oil could extend a U.S. slowdown, the International Monetary Fund talked of prolonged global economic weakness and European Union Economic Commissioner Joaquin Almunia warned of 1970s-style stagflation in an interview with a Japanese newspaper.

The Group of Eight ministers acknowledged the difficulty of supporting growth after a U.S. housing slump triggered a global credit crisis. The risk of record oil and food prices percolating into wages and other costs had made "policy choices more complicated", they said.

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