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(Adds details on China, metals tariffs)
By David Lawder
WASHINGTON, May 29 (Reuters) - The U.S. Treasury believes it would be better for Italy and other euro-zone countries to work out their issues with no major changes to the bloc, a senior Treasury official said on Tuesday as Italian political and market turmoil emerged as a key topic for a G7 finance leaders meeting this week.
Speaking to reporters, the official said that Treasury was tracking Italy's political turmoil closely, but he has not seen any systemic impact from volatility in Italian and international markets that was a concern for the United States.
"It would be better if they were to work things out within the euro zone without making significant changes there, and certainly the Italians have the opportunity to do that," the official said.
Italy, the euro zone's third largest economy, suffered its biggest market sell-off in years after the country's latest failure to form a government sparked worries about new elections that could lead to a bigger mandate for euro-skeptic politicians and cast doubt on Italy's future in the euro zone.
The turmoil hit U.S. bank shares and caused a sell-off of euro assets and a rush into safe-haven Treasury debt, sending the dollar to a 10-month high against the euro.
The Treasury official said it was unclear who would be representing Italy at the G7 finance ministers and central bank governors' meeting on Thursday, Friday and Saturday in Whistler, Canada. He said the International Monetary Fund would likely lead the discussion on global risks.
U.S. Treasury Secretary Steven Mnuchin is expected to field questions from G7 officials about U.S. negotiations with China on trade and intellectual property, the official said.
The Trump administration said it was pressing ahead with its threat to impose tariffs on $50 billion worth of Chinese goods and will announce a revised target list in mid-June, and Treasury will announce proposed investment restrictions and export controls on Chinese companies by June 30.
"I expect the secretary will describe our view that China needs to be a much more responsible member of the global economic system and that China has taken advantage of the international system with practices that undermine fair and reciprocal trade. And I expect that will be a good, healthy discussion," the official said.
U.S. Commerce Secretary Wilbur Ross is expected to travel to Beijing next week to try to work out details of Chinese purchases of U.S. goods aimed at reducing the U.S. trade deficit with China, following up on announcements made by Chinese and Trump administration officials earlier this month.