Group of Seven finance ministers and central bank governors from Britain, Canada, France, Germany, Italy, Japan and the US have held a two-day conference that started on Friday in Boca Raton, Florida, for talks on the global economy.

They are working to produce a statement likely to highlight improving global economic prospects.

But the officials tried to refine a message on volatile currency markets in an effort to show a united front on economic policies.

Given sharp divergences in the priorities held by the US, the 12-country eurozone and Japan, forging a consensus that sends an unequivocal message to the markets may prove difficult if not impossible, analysts have warned.

"Every country wants a weaker currency and they can't all get what they want," said Greg Anderson, senior currency strategist with ABN Amro, in Chicago.

"I'm betting on no change to the (G7) statement," said David Gilmore, analyst at Foreign Exchange Analytics.

Japanese moves

"Europe has the power to affect the exchange rate with a rate cut, which the US would welcome. And calling for stable exchange rates or a sentence protesting at excessive volatility smacks of manipulation, which (Washington) finds repugnant."

Smiles apart: UK's Gordon Brown
(L) and US Treasury's John Snow

While Japan is also worried about the weak dollar, Japanese authorities have pledged they will continue to intervene in the markets to curb the yen's rise - a strategy that has forced the euro to bear the brunt of the dollar's fall.

Officials debated the code words "flexibility" signalling satisfaction with a falling dollar, and "stability" suggesting officials want to brake the dollar's decline.

Japanese Finance Minister Sadakazu Tanigaki, deflecting questions about Tokyo's position, told reporters, "Let's see how the discussion develops."

A European source close to the discussions, which opened on Friday with a series of bilateral sessions, also remained noncommital.

"The discussions are continuing," the source said, without elaborating.

Eurozone concerns

The talks take place as eurozone financial and business leaders are worried that the appreciating euro - up about 22% in the past year against the dollar - will make their exports more expensive and less competitive and thereby endanger a fragile economic recovery in the region.

The Euro has risen 22% against
the greenback in the past year

In the past month they have repeatedly gone public with their discomfort.

Such written and oral interventions have managed to stem the surge in the single European currency, which has been hovering around $1.25 after hitting a high of $1.2898 in early January.

As the talks got underway, the euro surged past $1.27.

French Finance Minister Francis Mer said on Friday the session should approve a final declaration that leaves no room for misinterpretation by markets.

Mer said ministers must avoid the ambiguities that became apparent in a statement issued by the group in Dubai last September.

The language adopted there was seen as supporting a further fall in the dollar. The Dubai declaration called for greater exchange rate "flexibility", which was interpreted by markets as a tacit signal that the dollar should be allowed to fall further.

US comfort

Analysts say the US, despite assertions to the contrary, appears quite comfortable with a declining dollar, notably in a presidential election year.

The weak dollar spurs US exports and helps narrow the massive US trade deficit.

The record $521 billion US budget deficit proposed by President George Bush, which saps global capital and weighs on the dollar, is seen a significant issue here as well.

US officials say the budget is sound, but analysts are sceptical.

Treasury Secretary John Snow said he shared the view the defict was "too large", but said the administration had a plan to curb the deficit.

"We need the cooperation of Congress to control spending," he said.