ROME (Reuters) - G7 finance ministers headed to Rome to discuss the global economic crisis on Friday with a warning from Germany that the world could be plunged back into the dark days of the 1930s if governments resorted to protectionism.

The G7 industrialized economic powers, all in recession, are under pressure to prove they can work together to stop the rot rather than engaging in a "beggar-thy-neighbor" battle where each country fends for itself, sometimes at others expense.

"We will have to do everything to ensure history does not repeat itself," German Finance Minister Peer Steinbrueck told parliament a few hours ahead of the Rome meeting. "Right now, I think Germany has a huge interest in ensuring, at international meetings, that the world does not make the same mistakes it made in the 1930s."

Italian Prime Minister Silvio Berlusconi said the Rome G7 would focus on improved regulation of the financial sector, where the current trouble began when a credit boom ended. "The problem is that the effect on the real economy, for the most part, is still to come," the IMF's Strauss-Kahn said.

Like Berlusconi, French Economy Minister Christine Lagarde put the focus ahead of the Rome meeting on the need for better regulation of banks and the financial sector.

G7 finance ministers are keen not to fuel further tension at the moment over competition via currency values, according to information gathered from pre-G7 briefings with officials.