A meeting of Group of Seven finance chiefs on Friday will discuss the struggling world economy and progress in regulating the financial sector but a coordinated action plan to calm markets is unlikely.

Delegates at the one-day gathering in the Mediterranean port city of Marseille will seek to emphasize their commitment to preserving the fragile global recovery while avoiding promoting a one-size-fits-all approach, G7 sources say.

Host country France is expected to indicate that different responses are appropriate in different countries to the latest crisis of confidence rocking world markets.

This is not a G7 where we are expecting to prepare a formal communique, a French source said. We are sticking to the blueprint of recent G7 meetings, which have been informal ones.

Growing fears of a tip back into recession are piling pressure on the G7 finance ministers and central bank governors to agree to moderate austerity drives in some rich economies and keep monetary policy ultra-loose.

France is chair this year of both the Group of Seven major industrialized economies and the wider Group of 20, which must respond to sharp market sell-offs in August that betrayed high anxiety among investors over the euro zone's debt crisis and U.S. economic downturn.

SENSE OF URGENCY

Fears the global economy may have entered its most difficult period since the collapse of Lehman Brothers has injected urgency into Friday's talks but the sense of purpose evident in 2008 and 2009 is not yet evident.

Gavin Friend, a strategist at National Australia Bank in London, said the G7 was unlikely to produce a grand plan but market expectations were running so high that a failure to come up with a weighty statement could disappoint. This meeting comes at a critical time, he said.

While Europe wants to keep its commitment to austerity, the United States is closer to the International Monetary Fund's position that fiscal stimulus is needed.

President Barack Obama is due to announce a big job-creating package on Thursday.

A Canadian official said on Tuesday that loosening austerity measures could ease short-term recession risks but pruning sovereign debt was the top goal. He said if there were to be any additional stimulus spending, it would be nowhere near the size of the 2008 round of globally coordinated fiscal stimulus.

Britain, meanwhile, is sticking fast to its tough austerity program.

International Monetary Fund chief Christine Lagarde has called for a recapitalization of European banks but sources said euro zone governments have no plans to inject any further capital into banks over and above the money earmarked for the financial sector in emergency loan programs to Greece, Ireland and Portugal, sources said.

With Asian economies deeply concerned about the West's debt crisis and slow growth, Bank of Japan Governor Masaaki Shirakawa said on Wednesday euro zone debt would be high on the G7 agenda.

I presume Europe's sovereign problems will have a prominent place on the G7 agenda, Shirakawa said, noting the whole world was at risk if Europe's debt woes destabilize its banks.

A source in Brussels said the G7 would likely agree to keep monetary policy accommodative, slow fiscal consolidation in states where that is possible and implement structural reforms.

The mood is not for finger-pointing, but what we can do together to address the issues, that have become incredibly more complicated, the source said.

The G7 may also point to the need for a rotation of growth -- that when developed countries slow down, emerging economies like China pick up the slack. That could mean a call for economies with large current account surpluses to increase domestic demand and allow their exchange rates to appreciate.

Currencies are bound to be discussed after the Swiss National Bank shocked markets by setting an exchange rate cap on the soaring franc.

Japan's new finance minister Jun Azumi made clear on Monday that Tokyo was far from comfortable with current yen levels and said he would seek to convince G7 finance chiefs that a strong yen was detrimental for the world economy as well as Japan's.

Three sessions of talks in Marseille will focus on the global economy and financial regulation, including discussion of the health of Europe's banking system.

No final communique will be issued, but the talks will wrap up with a news conference at around 10:00 p.m. (2000 GMT).

The first session of talks in Marseille will be a debate on financial regulation, including a discussion of the health of the banking system in Europe and elsewhere, introduced by future ECB Chairman Mario Draghi, who also chairs the Financial Stability Board tasked by the G20 with steering banking reform.

A session on the global economy will discuss recent events, including the downgrade of the U.S. credit rating and the euro zone's July 21 crisis package to strengthen its bailout fund. it will also discuss global macroeconomic coordination.

A working dinner will include finance ministers, central bank governors and heads of global financial institutions.

(Additional reporting by Catherine Bremer in Paris, Jan Strupczewski in Brussels, Leika Kihara in Tokyo and Louise Egan in Ottawa; Writing by Catherine Bremer, editing by Mike Peacock)