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HIGHLIGHTS-Comments from Italy G8 finmins meeting

LECCE, Italy, June 14 (Reuters) - Following are comments from policymakers at a meeting of Group of Eight finance ministers in southern Italy on Friday and Saturday.

U.S. TREASURY SECRETARY TIMOTHY GEITHNER

On recovery:

"I don't think we're at the point yet where we have a recovery in place. I think what you can say is, that the force of policy actions that have been put in place and in the pipeline have brought about a very important reduction in concern about the prospects of a deep recession globally.

"They've helped reduced concerns about deflation risk that we saw start to intensify in the second half of last year, and they've helped to reduce concerns about systemic risk in the financial system.

"Those are very healthy developments, very welcome developments, and they are a necessary step towards getting back in the path of growth, but i don't think we're at the point yet where we can say we have a recovery in place."

UK FINANCE MINISTER ALASTAIR DARLING

"What I said in the Budget holds, that we'll start to see a return to growth towards the end of this year," Darling told Reuters in an interview on the sidelines of the meeting.

"A lot will depend on other countries making progress: on cleaning up their bank balance sheets; volatility in commodity prices, oil for example. So I think there are reasons to be cautious."

"One thing is certain: we're not there yet. Nobody's talking about exiting now. that's still some way down the track," Darling told a press conference later on Saturday.

"Whilst we can be confident that we will get through this, there is still a lot of uncertainty and problems that need to be resolved."

"There's still a job of work to be done and all my colleagues share my view. This is still very much a work in progress."

"We are concerned that the oil price has gone up so dramatically, which is why we need to repeat our efforts of last year, where we closely engaged with the Gulf countries and other oil producers."

IMF MANAGING DIRECTOR DOMINIQUE STRAUSS-KAHN

On dollar:

"I don't see the dollar as being weak, I think the dollar has been today correctly valued by the market.

"We see a dollar which today is stronger than one year ago....so I don't see today a weak dollar and I don't forecast that we would have to expect many changes in the coming time."

On economy:

"We have to stay very careful. The recovery is weak. Many actions still need to be taken. The social costs will continue."

"Even if the green shoots are real, growth as an average will only come back at the beginning of 2010 which means an an unemployment peak at the beginning of 2011."

"When you look at the bank spreads they are still very high indicating that the stress on the financial sector is still important."

"The idea that the crisis may be behind us is much to early at the same time of course we have to think about the exit strategy."

ITALIAN ECONOMY MINISTER GIULIO TREMONTI ON STRESS TESTS

"In Europe we haven't started to talk together about stress tests either national or European, secret or public."

"In Europe there is a national but standardised system (of stress tests) applied so far in Italy, for example, with positive results."

ON SPECULATION:

"Speculation is coming back, a certain type of finance is raising its head again and doing the same not very nice things it was doing until last summer. Concern about this came not just from italy but from everybody, there is a return of speculation on derivative and commodity markets."

GERMAN FINANCE MINISTER PEER STEINBRUECK ON STRENGTH OF THE EURO:

"I have always said that the German economy is reacting amazingly inelastically to a strong euro."

ON A CAPITAL INCREASE FOR THE INTERNATIONAL MONETARY FUND:

"Germany will contribute bilaterally with $20 billion to the initial capital increase of $250 billion for the IMF."

ON "EXIT STRATEGIES" FROM ECONOMIC STIMULUS PLANS:

"At the moment we are still engaged primarily in fighting the crisis. But the issue is to act in time to prevent any inflationary developments playing a major role. All of the G8 are aware of the risks for the capital markets".

"We share the position of the IMF that any stabilisation measures have to be connected to exit strategies."

"I will support the request to the IMF to work out options for exit strategies."

ON FINANCIAL MARKETS REFORM:

"There was a very positive strengthening of the commitment of London (the G20 summit) (on) financial market regulation."

ON THE GLOBAL ECONOMY:

"There was the widespread view that there are perhaps the first signs of stabilisation. But that is not an optimistic view."

"I am very cautious, but there are indeed indicators which show that there will be possibly a certain stabilisation."

"But I share the view of the IMF completely that the date and the drive of the upswing and the sustainability are very insecure."

"The upswing in the U.S. and emerging countries like China will be earlier that in Europe."

"For the United States and the emerging countries I expect an upswing like a clear V -- that means fast slowdown and also fast upswing."

"For Europe and Germany I expect more or less a mix of L- and V-kind of upswing."

ON "STRESS TESTS" OF BANKS' HEALTH:

"The European position is yes, but no publishing of individual results for banks."

FRANCE ECONOMY MINISTER CHRISTINE LAGARDE ON BANK STRESS TESTS

"We were able to explain ourselves on the valuation methods of the tests that were described and on the fact that we are not trying to hide things under the carpet," Lagarde said.

"Each one is working to their own calendars...methods, and I think we agreed on the aims."

"We are debating it currently among Europeans to see if it (publishing) would be by country, if we do it all at the same moment, if we publish only the criteria, if we do the criteria and the results," Lagarde said.

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Comments from Friday:

LAGARDE ON OIL PRICES:

"It is very difficult to determine the right price. That's why the president (Nicolas Sarkozy) said that we need to have discussions between producing and consuming countries. We have periods of very high volatility...it's a subject that I would like to talk about tomorrow, that was briefly discussed by the deputies today."

CANADIAN FINANCE MINISTER JIM FLAHERTY

"I don't expect an agreement," he said in answer to a question on the chances of a deal on exit strategies. "These are early discussions."

"It's time to have a discussion on how to disengage from the fiscal stimulus. It's realistic to start talking about the exit strategy.

"Everyone should do stress testing of their national banking system, it's fundamental for trust. "There is more to be done in Europe (on stress testing), they should publish at least their systemic results.

"There is some resistance in Europe on stress tests; there is a tendency to look to other countries to resolve the problems.

"There are some indications that the real economy is improving in North America; these are early, relatively modest signs. First we will have stabilisation."

SENIOR JAPAN FINANCE MINISTRY OFFICIAL

A senior official of Japan's finance ministry, speaking after a meeting between U.S. Treasury Secretary Timothy Geithner and Japanese Finance Minister Kaoru Yosano, said:

"The minister (Yosano) said the U.S. economy is stabilising, which is encouraging. Secretary Geithner also said it has got significantly better."

"Both ministers shared the view that the worst has been passed."

RUSSIA FINANCE MINISTER ALEXEI KUDRIN

Russian officials had said about $10 billion of IMF bonds would be bought as part of an IMF drive to raise funds.[ID:nLA1052951]

But finance minister Alexei Kudrin said on Friday: "We are not going to significantly change the structure of our investments. Ten billion is not a significant change (in currency reserve holdings). A serious change is when we used to invest $100 billion in Freddie Mac and Fannie Mae, but no longer do."

"In the nearest future, I do not see major changes in our policy in relation to the dollar." (Compiled by Patrick Graham) (Lecce newsroom; patrick.graham@thomsonreuters.com)

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