The World Bank warned today that a full-scale currency war risked a return to the protectionism of the 1930s amid fears that growing tension between Washington and Beijing will hinder the global economy's recovery from its deepest post-war slump.

Concerns that this weekend's annual meetings of the Bank and the International Monetary Fund will see an escalation of the war of words between the US and China over the level of the yuan sent the dollar to an eight-month low against the euro today.

In Washington, the heads of both the Bank and the IMF used press conferences to call for international co-operation to resolve the row.

"If one lets this slide into conflict or forms of protectionism, we run the risk of repeating mistakes of the 1930s," said Robert Zoellick, the Bank's president.

Zoellick added that the recovery was proving too weak to reduce joblessness: "Whenever you have high unemployment, you have risks of other tensions. We see this now in debates on currencies."

The US says China has been deliberately intervening to keep its currency low, thereby boosting its exports. Tim Geithner, the US treasury secretary, said this week that China's actions set off "a dangerous dynamic" and urged the international community to put pressure on Beijing to allow the yuan to appreciate.

China's premier, Wen Jiabao, said margins on Chinese exports were thin and that forcing the yuan higher would lead to social unrest.

Zoellick said: "History shows there is no future in 'beggar thy neighbour' policies, and in an increasingly inter-connected world, we need not just to be conscious of the negative effects policies can have on others, but we need to act accordingly."

He added: "Tensions can lead to trouble if not properly managed. The recent crisis is still affecting jobs and livelihoods across the world. If ever there were a time that we should not turn our backs on international co-operation, it is now."

Dominique Strauss-Kahn, the managing director of the IMF, said the international co-operation seen during the worst of the financial and economic turbulence was not vanishing, but was decreasing. "That is a real threat, because everybody has to keep in mind this mantra that there is no domestic solution to a global crisis.

"Many are talking about currency war," he added. "It is true to say that many do consider their currency as a weapon, and that is certainly not for the good of the global economy, of course."

Responding to Geithner's demand that the IMF take a tougher line with Beijing, Strauss-Kahn said the IMF had been the only institution to call repeatedly for a revaluation of the Chinese yuan.

Strauss-Kahn expressed sympathy with Geithner's call for reform of the IMF's governance to be linked to action on currencies. China and other emerging countries want their increasing importance in the global economy to be reflected at the IMF and reforms are currently being discussed.

He said that if the bigger developing nations wanted to be at the centre of the IMF "it goes with having more responsibility for what you do and the consequences of what you do for the global economy".