The yen reached a historic low against the euro and remained close to a four-year low against the dollar on Friday due to expectations of low Japanese interest rates. Meanwhile, oil prices stayed high at over $61 per barrel. Despite Germany's Ifo business sentiment survey showing a bigger drop than anticipated, the euro only slightly declined against the dollar, while Bunds rose. The survey did not change the belief that euro zone interest rates will increase next month. Japanese exporters benefited from the weak yen, boosting the Nikkei average to a seven-year high, while European stocks were affected by concerns over Iran's nuclear program and weakness in banking stocks. The euro briefly hit a record high of 159.63 yen before dropping to around 159.25 yen, with traders predicting it would soon exceed the 160-yen mark. The dollar traded around 121.40 yen after reaching 121.63 yen for the second consecutive day, close to the highest level since December 2002. The recent increase of 25 basis points in Japanese interest rates to a 10-year high of 0.5 percent has not stopped the yen from weakening against major currencies, as rates in Japan are still lower compared to other developed countries. According to Ronnie Steadman from Lloyds TSB Financial Markets, the rise in short-term rates in Japan will not deter Japanese investors, especially households, from buying foreign bonds and stocks for better returns overseas. Investors have also taken significant short positions against the Japanese currency through carry trades, borrowing yen to invest in higher-yielding assets elsewhere. The New Zealand dollar, which has high yields, reached a 14-month high against the yen on Thursday. Bank of Japan Governor Toshihiko Fukui reiterated on Friday that rate increases will occur gradually. Germany's Ifo research institute reported a decrease in the business climate index to 107.0 in February from the previous month's 107.9. Despite this decline, analysts still predicted that the European Central Bank would likely raise rates to 3.75 percent in March. The euro was down 0.1 percent at $1.311 at 1015 GMT. Following the Ifo reading, Euro zone bonds rebounded and yields on the benchmark 10-year Bund decreased by 3.2 basis points to 4.066 percent. Meanwhile, oil prices rose above $61 a barrel due to a sharp drop in US gasoline stocks and concerns about Iran's nuclear program, with US crude reaching $61.40 a barrel. It reached $61.49 earlier, its highest point since Jan 2. Iran stated it would not show any weakness regarding its nuclear program, following the UN nuclear watchdog's announcement that Tehran had not met the deadline to suspend uranium enrichment. In early trading, European shares declined due to concerns about Iran and weakness in banking stocks, despite strong results from industrial companies and higher commodity prices. The FTSEurofirst 300 index of top European shares was down 0.16 percent at 1,537.54 points, with slight decreases in British and French indexes and minimal change in Germany's. Japan's Nikkei rose 0.44 percent to a seven-year high, driven in part by gains in exporters like Canon Inc benefiting from the weak yen. The increase was moderated by a decrease of up to 29 percent in Sanyo Electric Co. following news that it was under investigation by regulators and had failed to report over $1 billion in losses, according to a newspaper. The MSCI All-Country World Index stood at 380.93, up 0.05 percent.