Euro rise unwanted, G7 misunderstood - Juncker

By Michele Sinner

LUXEMBOURG (Reuters) - Financial markets failed to understand the message from the Group of Seven financial leaders on foreign exchange, the chairman of euro zone finance ministers said on Thursday, criticising the euro's surge to new highs.

The comment by Jean-Claude Juncker, the Luxembourg prime minister who chairs monthly meetings between euro zone finance ministers and the European Central Bank, sent the euro sharply lower against the dollar <EUR=>.

"I don't have the impression that financial markets and other actors have correctly and entirely understood the message of the G7 meeting," Juncker told reporters.

Finance leaders from the Group of Seven industrial countries -- the United States, Canada, Japan, Britain, Italy, France and Germany -- said in a statement on April 11 they were concerned about sharp fluctuations in foreign exchange markets.

"There have been at times sharp fluctuations in major currencies, and we are concerned about their possible implications for economic and financial stability," the G7 statement said.

The statement was more sharply worded than the group's comments on foreign exchange at its previous meeting, in February, and depressed the euro at the start of the week.

But the euro hit new highs against the dollar and the British pound earlier on Thursday, following data from the United States and the euro zone, which showed euro zone inflation at a record high of 3.6 percent in March.

That data erased any earlier expectations that the European Central Bank would cut interest rates to support slowing growth in the single currency zone, giving the euro a strong boost.