Finance ministers and central bankers from the Group of Seven -- Britain, Canada, France, Germany, Italy, Japan and the United States -- were heading to this western German city to discuss a dauntingly wide range of issues in just two days.

In addition to currency matters, the ministers are expected to assess worldwide economic prospects, global warming, financial governance in Africa, stalled multilateral trade talks and the operation of global hedge fund markets.

But it is the Japanese yen that is threatening to drive a wedge between the eurozone on the one hand and Japan and the United States on the other on what steps -- if any -- to take to stem a slide in the currency.

The yen has fallen 9.0 percent against the euro since last April, prompting fears in Europe that eurozone exports will become less competitive, thereby imperiling a nascent economic recovery.

But Japanese officials seem unwilling to take any action.

A Bank of Japan policy board member, Hidehiko Haru, told reporters on Thursday: "Overall, (yen weakness) will have a positive effect."

And Japanese Finance Minister Koji Omi, before heading off to Essen, also showed little appetite for action, saying only that the currency's value should reflect the health of the economy.

"Foreign exchange rates should reflect (economic) fundamentals," he said in comments that echoed the last G7 statement issued in Singapore in September when European ministers similarly failed to muster sufficient support for joint action on the yen.

German Finance Minister Peer Steinbrueck, who is hosting the talks in the palatial Villa Huegel mansion in the south of Essen, was nevertheless adamant that the issue be discussed again this time round.

In the view of Washington and Tokyo, the Japanese currency is fairly valued by competitive markets.

And Japanese officials have said the yen would not be high on the agenda.

"I heard that we are going to have wide-ranging discussions on the domestic and overseas economies, as well as monetary and foreign exchange issues. I want to explain the current situation of the Japanese economy and how a steady recovery is taking place," Omi said.

With inflation still very tame, the Japanese government has been pressing the Bank of Japan not to rush to raise its super-low interest rates yet from 0.25 percent, a move which would tend to drive up the value of the yen.