SINGAPORE, Feb 9 Group of Seven finance officials are likely to press this weekend for gr

SINGAPORE, Feb 9 (Reuters) Group of Seven finance officials are likely to press this weekend for greater currency flexibility in Asia, but analysts doubt China will be singled out to any greater degree than it was in the last meeting.

Market watchers are turning their attention to China's yuan ahead of a G7 finance ministers' and central bankers' meeting in Germany on Friday and Saturday as expectations fade for the yen's weakness to be a key issue.

Analysts said China might be criticised in the context of the need for emerging countries to show greater currency flexibility to reduce global economic imbalances, but the quicker pace of the yuan's appreciation this year could deflect harsh criticism being aimed specifically at Beijing.

''Granted, there is still plenty of evidence of currency manipulation in most Asian countries in as much as reserves accumulation generally is still very high,'' Shahab Jalinoos, a currency strategist at ABN AMRO, said in a research note.

''But overall, we think China and Asia has put enough on the table in terms of increased FX flexibility to avoid a blistering attack from G7 ministers this time round,'' he said.

The yuan rose 3.4 percent against the dollar last year, while the Thai baht was Asia's best performer, gaining 14 percent.

Indonesia's rupiah rose 9.4 percent.

But the pace of appreciation in the closely controlled yuan has accelerated ahead of the G7 meeting.

It has gained about 0.7 percent so far this year, putting it among the top gainers in Asia and prompting analysts to predict it could rise as much as 7 percent this year.

''We think the yuan may have already pre-empted the G7 meeting.

Unless we see a strongly worded statement directed at China, we don't expect the NDFs to have a significant knee-jerk effect to the G7,'' said Emmanuel Ng, currency strategist at OCBC Bank.

He was referring to the non-deliverable forwards market, used by speculators to bet on the yuan's movements.

FLEXIBILITY However, the yuan's rise since its landmark revaluation in 2005 has done little to dent China's trade surplus, which jumped 74 percent last year to a record $177.5 billion.

The surplus has helped push China's foreign exchange reserves to a staggering $1.07 trillion as the People's Bank of China bought dollars to curb the yuan's strength.

U.S. data due next week is expected to show the trade deficit with China hit a record somewhere near $230 billion in 2006, compared to $39.5 billion 10 years ago.

''The G7 has grounds to once again raise China as an issue as far as global imbalances and current account mis-alignment is concerned,'' Jalinoos said.

In Singapore last September, the G7 ministers called for emerging countries with large current account surpluses, especially China, to embrace greater currency flexibility.

''There may be a general call for the need for Asian currency appreciation, but I don't expect any significant pressure,'' said Ben Simpfendorfer, currency strategist at Royal Bank of Scotland.

Thio Chin Loo, currency strategist at BNP Paribas, said G7 ministers' main focus may be in other areas, such the role of hedge funds in financial markets, fiscal policy and broad economic stability.

U.S. Treasury Secretary Henry Paulson has played down the yen as a G7 issue, in contrast to European policy makers.

But he has repeatedly called for China to move faster towards a flexible yuan in the face of increasingly frustrated U.S.

congressmen who say the currency is undervalued.

The yuan's exchange rate is becoming more important in Asia, drawing some influence away from the yen, analysts say.

Asian currencies have shown a closer correlation to the yuan recently and a looser link to the yen , which has resumed a slide against the dollar ahead of the G7 meeting.

REUTERS PV GC1418