BRICS warns volatile commodity prices pose risk for recovery

Inflation has been rising on higher food, energy and metal prices due to Japan's nuclear disaster and the Libya conflict, while investors worried about the global outlook have poured money into fast-growing emerging economies.

"Excessive volatility in commodity prices, particularly those for food and energy, poses new risks for the ongoing recovery of the world economy," Brazil, Russia, India, China and South Africa -- or BRICS nations -- said in a joint summit communique.

The five nations said they would "carry out closer cooperation on food security", adding that the international community needed to work together to increase production capacity of commodities in general, not just food.

Russian President Dmitry Medvedev, Chinese President Hu Jintao, Brazil's Dilma Rousseff, South Africa's Jacob Zuma and Indian Prime Minister Manmohan Singh gathered for the talks on Thursday on China's southern Hainan island.

It marked the third annual meeting for the leaders of the four original BRIC nations, and the first in an expanded format that included South Africa, which was invited to join the bloc late last year.

Together, the five countries represent more than 40 percent of the world's population, and their combined GDP accounted for 18 percent of the global total in 2010, according to the International Monetary Fund.

They said emerging economies were threatened by "massive" capital flows which have been blamed for pushing up their currency values.

The leaders meanwhile welcomed discussion about the role of the IMF's international reserve asset, noting the global crisis had exposed the "inadequacies and deficiencies" of the current monetary and financial system.

"We support the reform and improvement of the international monetary system, with a broad-based international reserve currency system providing stability and certainty," the statement said.

French President Nicolas Sarkozy and US Treasury Secretary Timothy Geithner last month called for a widening of the basket of currencies underlying the IMF's Special Drawing Rights (SDR) during a G20 seminar in China.

The West wants to see the yuan become part of the SDR basket as part of its efforts to prod Beijing into opening up its tightly managed and controversial currency regime.

The issue was unlikely to have been raised at the summit as it is a contentious one -- Brazil believes the yuan is undervalued, giving China an edge on exports and hurting the South American nation's trade balance.

The BRICS state development banks also agreed to open credit lines in their national currencies, Russia's state development bank Vnesheconombank said in a separate statement, which would reduce their reliance on the dollar.

The leaders said nuclear power would continue "to be an important element in future energy mix of BRICS countries".

The announcement came even after Japan declared the disaster at the Fukushima Daiichi nuclear plant, which was hit by the March 11 quake-tsunami, was a level seven emergency -- the worst rating on an international scale.

"International cooperation in the development of safe nuclear energy for peaceful purposes should proceed under conditions of strict observance of relevant safety standards," the leaders said in their statement.