G7 says protracted market turmoil saps outlook

WASHINGTON (Reuters) - The global economic outlook has deteriorated because financial market turmoil has proven more protracted than expected, the Group of Seven finance chiefs said in a communique after meeting on Friday.

"We remain positive about the long-term resilience of our economies, but near-term global economic prospects have weakened," the finance ministers and central bankers from the seven rich nations said. "The turmoil in global financial markets remains challenging and more protracted than we had anticipated."

The finance leaders from the G7 -- the United States, Britain, Canada, France, Germany, Italy and Japan -- expressed concern in the statement about the sharp moves in currency values seen since they last met in February.

"Since our last meeting, there have been at times sharp fluctuations in major currencies, and we are concerned about their possible implications for economic and financial stability," they said.

(Reporting by David Lawder and Mark Felsenthal)