Although the meeting of finance ministers from the Group of Eight, Britain, Canada, France, Germany, Italy, Japan, the United States and Russia, comes ahead of a G8 summit of heads of state and government in the seaside resort of Heiligendamm in early June 6-8, US Treasury Secretary Henry Paulson has decided to skip the meeting.

The United States will be represented by his deputy, Robert Kimmit.

While the reason for Paulson's absence remains unclear, observers see it as a snub to the meeting's host, German Finance Minister Peer Steinbrueck.

Steinbrueck preferred to go on vacation with his family to Namibia rather than attend a meeting of G7 finance ministers in Washington last month.

Germany and the United States are already at odds over Berlin's determination to establish stricter controls over speculative hedge funds.

Steinbrueck, the German finance minister, said in a recent newspaper interview that he would press for a voluntary code of conduct for the hedge fund industry, even if a deal was unlikely by the G8 summit in June.

In response, US Treasury Secretary for International Affairs Clay Lowery said: "There has not been a lot of clarity on exactly what that means.

"We're not necessarily in favour of that because we think industry best-practice is probably the best way to get to better market discipline. I think there is a lot of consistency among the various positions but obviously if there is more disagreement we'll find out this week."

A senior Canadian finance ministry official earlier this week said he was "not sure there is necessarily as big a gap as is sometimes portrayed."

"Our views is that this process ... has helped improve collective understanding of how global markets function, where some of the risks are and -- very importantly -- where the real benefits there."

The G8 ministers in a final statement Saturday can also be expected to comment on world growth prospects and currency markets.

But their past communiques, calling for China to allow its currency to float more freely and appealing in general for exchange rate stability, have been so bland as to have little impact on world markets.

The closed-door meeting had been threatened of being upstaged by the controversy surrounding Paul Wolfowitz, who had planned to attend the meeting before announcing Thursday he will step down next month as World Bank president over a favoritism scandal.

Wolfowitz, who had been expected to brief the finance ministers on the Bank's programmes to fight corruption and illegal transfers of capital, would not travel to Germany for the meeting, a source said after his resignation announcement.