http://news.yahoo.com/s/nm/20070411/pl_nm/g7_dc_3;_ylt=Aqjx8FHd6nA68QPquS0d.bCiUMYA

G7 show goes on as Germany takes a holiday

By Brian Love, European Economics Correspondent

Wed Apr 11, 2:27 PM ET

PARIS (Reuters) - G7 capitals maintained an uneasy silence on Wednesday as no-shows by Germany and China compounded the impression that little of consequence could happen when the world's industrialized powers meet on Friday in Washington.

ADVERTISEMENT

Officials said not too much should be expected of a Group of Seven meeting that was largely a stock-taking exercise on issues from hedge fund supervision to currency exchange rates, energy security and a still-healthy global economic outlook.

German Finance Minister Peer Steinbrueck stuck to his choice of a family holiday in Namibia instead, and a ministry spokesman said he would not interrupt his vacation for the G7 -- a forum Germany is chairing for most of 2007.

China, under pressure to let its state-managed currency rise in value, declined a U.S. invitation to talks with G7 ministers on exchange rates, saying without explanation that vice finance minister Li Yong would however attend a dinner in Washington.

Government officials in other capitals refused to comment on the no-shows during several off-record media briefings ahead of Friday's talks, but Steinbrueck drew accusations inside his own country of neglecting its leadership role this year as chairman of the G7 and G8 forums, the second of which includes Russia.

"At a time when Germany has the presidency of the G8 and the EU, such calendar collisions should not arise," Michael Meister, a deputy parliamentary group leader of German Chancellor Angela Merkel's conservatives, told Welt Online.

The G7 comprises the United States, Japan, Canada, Germany, Italy, France and Britain, long-industrialized countries whose clout, in some cases, is in question given the rise of giants such as China and India in recent years.

As for financial markets, the euro's rise to record highs against the yen on Wednesday was taken as proof that Europe's howls of complaint prior to a G7 gathering just two months ago would not result in any attempt by G7 governments to work collectively to influence currencies.

"The signals from the U.S. continue to suggest that they are willing to countenance yen weakness for now as a higher yen is not in Japan or the world's best interest so soon after Japan emerges from deflation," said Gavin Friend, an analyst at Commerzbank.

Steinbrueck chaired the last meeting in early February, and used it to press Germany's case for closer inspection of the way hedge funds operate and whether they should be tracked more closely to ensure they pose no systemic risk to the global financial system because of looser regulation than banks.

A report by the G7-sponsored Financial Stability Forum is to be discussed in Washington in his absence, official said.

More broadly, Marco Annunziata, chief economist at UniCredit bank, said financial markets were sanguine for now about risks to what is expected to be another year of strong economic growth in the world as Europe and Asia make up for U.S. slack.

"There's no crisis and no sense of imminent crisis," he said.