UPDATE 2-Greek crisis overshadows G7 growth talks

Thu May 28, 2015 5:36pm EDT
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(Recasts with quotes from Lew, Lagarde, Japan finance minister)

By Michelle Martin and Tetsushi Kajimoto

DRESDEN, Germany May 28 (Reuters) - The head of the International Monetary Fund warned that Greece could fall out of the euro zone as it struggled to sort out its debt stand-off, which is adding to concern about the patchiness of global economic recovery.

The finance chiefs of most of the world's biggest economies met in Germany against the backdrop of Greece's unresolved crisis, rising oil prices and volatility in financial markets.

Japan's finance minister expressed concerns about a "rough" fall in the value of the yen to its lowest level against the U.S. dollar in more than 12 years, reflecting the contrasting outlooks for some of the world's big economies.

Greece was not officially on the agenda of the Group of Seven meeting on Thursday in a former palace in the eastern Germany city of Dresden.

Policymakers listened to leading economists spell out ways they could finally shake off the effects of the global financial crisis which struck nearly eight years ago.

But with a payment deadline looming next week, the Greek crisis was high on the minds of policymakers.

Christine Lagarde, the IMF's managing director, a key player in the negotiations alongside the European Union, warned that the talks could yet fail, forcing Greece into a debt default and an exit from the euro zone.   Continued...