Chancellor Alistair Darling and US treasury secretary Timothy Geithner will press their G7 allies this weekend to keep up their aid to help the global economy defeat its worst downturn in 70 years.

Aides said Mr Geithner and Mr Darling would argue that the recovery could falter if governments relied too much, too soon on still-sluggish spending by consumers and businesses.

Unemployment rates have hit double digits in the US and several European countries.

The talks in the Canadian town of Iqaluit, in Nunavut, begin today as Mr Geithner and US Federal Reserve chairman Ben Bernanke meet their counterparts from the Group of Seven major industrial countries.

The meeting occurs in the most unusual G7 setting yet: a tiny outpost 200 miles below the Arctic Circle where temperatures can dip well below freezing in February.

Canadian finance minister Jim Flaherty, the gathering's host, chose Iqaluit in part to drive home Canada's claim to a region that may contain one-fifth of the world's petroleum reserves.

Mr Flaherty has promoted an informal feel. He has banned ties during the meetings and, before the talks begin with a dinner tonight, he has invited the delegates to enjoy an afternoon of dogsledding.

Mr Geithner will probably face questions from G7 officials over what they see as unilateral US steps to tighten bank regulation, but at the top of the agenda are the steps each nation is taking to revive its economy.

Some countries have expressed concern about how long stimulus aid should be maintained amid worries about soaring budget deficits and the risk of inflation.

The risks still facing the global economy were highlighted dramatically yesterday when a flood of bad economic news sent markets plunging.

The Dow Jones industrial average fell by 268 points or 2.6%, its biggest loss in seven months. The market turmoil was triggered in part by worries surrounding rising debt levels in Greece and other European nations.

"We need to see a resumption of private-sector growth, but the key is that you don't want to withdraw government support prematurely," a senior US Treasury official said.

Mr Geithner is likely to point to the mistakes nations made during the Great Depression, when a tentative rebound fizzled after governments withdrew emergency support too soon.

US president Barack Obama set an example with a budget plan on Monday that would boost job creation efforts and raise the US budget deficit to a record 1.56 trillion dollars this year - 10.6% of the total economy.

In Japan, whose economy has struggled for two decades, the government unveiled more stimulus spending last week. Other G7 nations also have stimulus measures still in place, but some politicians in Germany and France have raised concerns about stoking inflation.

A year ago, the US pressed Europeans to boost their stimulus packages to match the 787 billion-dollar (£491bn) American effort. Europe resisted for fear of escalating budget deficits and instead enacted smaller stimulus packages.

Now the focus is more on the duration of the aid. Mr Geithner is expected to argue that government programs to support jobs must be kept in place through this year to give business and consumer spending time to gather momentum. On financial reform, the G7 group hopes to strengthen lax regulations that led to the financial meltdown. But efforts to reach consensus have faltered since the Obama administration surprised its allies by proposing tougher rules on risky bank activities.

"The Europeans were very upset that Obama was going off in a different direction than they had signed up for," said Nariman Behravesh, chief economist at IHS Global Insight.

Mr Obama's banking proposals dominated discussions at last week's gathering of finance officials in Davos, Switzerland, with European officials voicing concerns.

British officials have said they do not need the strict limits on risky trading operations the administration is proposing and French finance minister Christine Lagarde has expressed concern.

German finance minister Wolfgang Schaeuble has stressed the need for global co-ordination on financial regulation.

The G7 countries are the US, Japan, Germany, France, Britain, Italy and Canada.