"High and volatile oil prices pose a risk to the outlook, dampening consumer spending and company profitability."

The G7, which consists of the United States, Britain, Germany, France, Japan, Canada and Italy, meet here to review the outlook for world growth, including examining the fallout from soaring energy prices which hit a new high on Tuesday.

Brown said measures were needed to improve the functioning of the oil market to ensure lower and more stable prices.

"That is why as a next step I'm calling for action to improve the transparency and the efficiency of the oil market," he said.

Brown's comments reflect language likely to be mirrored in a G7 communique scheduled to be issued later last week.

Britain and Germany are championing a bid for more data on energy supply and demand as well as inventory levels which they hope will prevent speculative bubbles in the future.

U.S. crude oil futures soared to a record $50.47 a barrel on Tuesday. The rise was blamed on tight U.S. supplies after Hurricane Ivan blasted oil producing fields in the Gulf of Mexico and Nigerian rebels threatened to disrupt the country's output.

But heavy speculation by hedge funds has also been a prime suspect behind the 50 percent rise in oil prices this year.

Brown said he wanted renewed cooperation between oil producers, consumers and market participants to ensure oil market decisions are based on timely, reliable and transparent information.

"I'm also calling for an enhanced role for the International Monetary Fund (IMF) and World Bank, building on their experience with improving data and codes and standards, in encouraging better and more timely information," he said.

But more must be done to encourage the investment required to guarantee the stability of oil supply from both OPEC (Organisation for Petroleum Exporting Countries) and non-OPEC nations.

"Concerted action is needed by oil producing countries to promote sustainable investment in their reserves and productive capacity," he said.

In addition, he stressed that all countries need to do more to promote greater energy efficiency and develop new sources of energy, in a reference to the Kyoto Protocol on climate control which the United States has rejected.

"That is why international cooperation on tackling climate change will be a key theme of our G8 presidency," he said. Britain takes over the rotating presidency of the G7 and G8 next year. The G8 adds Russia to the rich-nation club.

Asked if the G7 would press China to take steps toward a more flexible exchange rate regime, Brown said only that finance ministers would be meeting the Chinese officials over dinner to discuss a broad range of issues.