Weak dollar is global concern: EU's Barroso

By William Schomberg

BRUSSELS (Reuters) - The dollar's fall is a source of global concern and the European Union wants a better balance between the U.S. unit and other major currencies, European Commission President Jose Manuel Barroso said on Friday.

Speaking to a group of journalists before departing for the annual Group of Eight industrial nations' summit in Japan next week, Barroso endorsed the European Central Bank's decision to raise its key interest rate despite warnings from some EU governments, notably France.

"I believe it is important we show at European level that we are committed to fighting inflation," he said.

"Inflation is a real threat," he said, adding it would have been very difficult to understand any other decision by the ECB, which raised its key rate by 25 basis points to 4.25 percent on Thursday.

In an indirect rebuke to French President Nicolas Sarkozy, who had warned publicly that a rate hike would harm a slowing euro zone economy, Barroso said: "When it comes to inflation, I have more confidence in the positions of the central banks than of politicians."

The head of the European Union executive said he did not expect the G8 leaders to take a stand on currencies but added: "This is a matter of global concern, the falling dollar.

"We would like to see a more balanced relationship between the dollar and other major currencies, including the euro."

Climate change and soaring fuel and food prices are likely to be the main themes of the G8 summit at a luxury hotel in Hokkaido, northern Japan.

Barroso also said he hoped President George W. Bush would show more ambition than in the past about curbing emissions of greenhouse gases blamed for global warming.

(Reporting by William Schomberg; Writing by Paul Taylor;

Editing by Dale Hudson)