G-7 SEEMS WORRIED MARKETS IGNORE COORDINATION Top officials of leading industrial nations appear deeply worried that financial markets have ignored their efforts to coordinate policies, which they believe they strengthened in talks last week. Monetary sources said officials were exasperated that the markets, which drove the dollar rapidly lower and severely disrupted bond and stock markets too, did not take heed of the policy commitments of the Group of Seven -- the United States, Japan, West Germany, France, Britain, Italy and Canada. Treasury Secretary James Baker went out of his way to reassure markets of his commitment to a stable dollar with a statement, and French Finance Minister Edouard Balladur underscored that by saying: "I don't believe at all that the Americans want a weaker dollar." West German Finance Minister Gerhard Stoltenberg said the dollar's latest rapid descent "involves the risk -- now already a tangible threat -- of a new strong surge of inflation, leading to a renewed rise in interest rates." But there were signs too, that while policymakers feared the market uproar, they seemed to accept there was little they could do until the economic picture changed, and currencies settled into a stable pattern as a result. Nor did there seem to be any enthusiasm at last week's semi-annual meetings of the IMF and the World Bank for higher U.S. Interest rates as the best way to curb the dollar's rapid descent. That distaste stems in part from fears of recession. Outgoing Deputy Treasury Secretary Richard Darman told television interviewers he did not think a policy of driving the dollar down would solve the U.S. trade deficit. "It would slow growth in Germany and Japan which would adversely affect our trade balance and ultimately it would drive interest rates up here which would throw us, if not (into) recession, into slower growth," he said. Asked if higher U.S. Interest rates would stabilize the dollar, Balladur said: "When a currency is maintained artificially high, by artificially high interest rates, it is not healthy." And resorting to higher interest rates could lead to recession, he said. Acknowledging the dollar's latest slide was now a fact of life, Balladur said, "there may be adjustments of course in one or other currencies, this is not a fixed rate system." But Federal Reserve Board chairman Paul Volcker said he might rein in credit if the dollar's slide deepens. U.S. Monetary sources also said Washington wanted it understood by markets the seven's commitments were genuine. "The United States and the six major industrial countries are fully committed to implementing our undertakings in these agreements," Baker told the meetings. Darman said Baker had been misinterpreted by markets which wrongly believed earlier remarks suggested he wanted a further decline in the dollar. Baker, Darman said, was committed to stabilizing currencies at current levels. Last week's statement from the seven reaffirmed a February 22 agreement in Paris in which the Reagan administration agreed to reach a budget deficit compromise with Congress and to fight protectionism. West Germany and Japan, meanwhile, agreed to stimulate domestic demand and lead a global upturn. Ministers believed the Paris pact was bolstered by Japan's promise of a 35 billion dlr supplementary budget. The sources said they believed Baker saw it as a major action. But the seven seem to accept their commitment to stable currencies applied to today's exchange rates and not those at the time of the Paris agreement, when the dollar stood higher. The Paris accord said, "currencies (are) within ranges broadly consistent with underlying economic fundamentals, given the policy commitments summarized in this statement." Now they accept the dollar's lower level, especially against the yen, as hard reality that is nonetheless consistent with the agreement. "The ministers and governors reaffirmed the view that around current levels their currencies are within ranges broadly consistent with fundamentals," last week's statement read. Monetary sources said policymakers understood markets were focusing on instability created by the gap between the U.S. Trade deficit and the surpluses of West Germany and Japan rather than prospective policy changes. European monetary sources said Bonn was still unconvinced that Washington meant business with its commitment to cut the budget deficit.