UPDATE 3-G20 steps back from currency brink, heat off Japan
* Underlines need to restore growth over cutting debts
* Japan escapes criticism over currency policy
* Communique hardened up, closer to G7 FX statement
* China concerned by 'spillover' from loose policies
By Randall Palmer and Lidia Kelly
MOSCOW, Feb 16 (Reuters) - The Group of 20 nations declared on Saturday there would be no currency war and deferred plans to set new debt-cutting targets, underlining broad concern about the fragile state of the world economy.
Japan's expansive policies, which have driven down the yen, escaped direct criticism in a statement thrashed out in Moscow by policymakers from the G20, which spans developed and emerging markets and accounts for 90 percent of the world economy.
Analysts said the yen, which has dropped 20 percent as a result of aggressive monetary and fiscal policies to reflate the Japanese economy, may now continue to fall.
"The market will take the G20 statement as an approval for what it has been doing -- selling of the yen," said Neil Mellor, currency strategist at Bank of New York Mellon in London. "No censure of Japan means they will be off to the money printing presses." Continued...