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 rates. Oil prices stayed near a seven-week high at over $61. Despite Germany's Ifo business sentiment survey showing a larger than anticipated decline in February, the euro only slightly decreased against the dollar. Japanese exporters benefited from the weak yen, boosting the Nikkei average to a seven-year high, while European stocks were weighed down by concerns over Iran's nuclear program. The euro briefly hit a record high of 159.63 yen before falling back to around 159.25 yen, with traders predicting it would soon surpass the 160-yen mark. The dollar was at around 121.40 yen, close to its recent peak of 121.63 yen and not far from the highest level since December 2002. The recent 25-basis-point increase in Japanese interest rates to 0.5 percent, the highest in a decade, has not stopped the yen from weakening against other major currencies. This is because Japanese rates are still lower than those in other developed countries. Ronnie Steadman of Lloyds TSB Financial Markets pointed out that the higher rates in Japan will not deter Japanese investors, especially households, from buying foreign bonds and stocks for better returns. Investors have also taken large short positions against the yen in carry trades, where they borrow in yen to invest in higher-yielding assets elsewhere. The New Zealand dollar, known for its high yields, reached a 14-month high against the yen. Bank of Japan Governor Toshihiko Fukui reiterated that rate increases will be gradual. Germany's Ifo research institute reported a decline in the business climate index from 107.9 in January to 107.0 in February. Despite this, analysts believe that the European Central Bank is likely to raise rates to 3.75 percent in March. The euro was slightly lower at $1.311 at 1015 GMT. Euro zone bonds recovered from early losses and saw yields on the 10-year Bund decrease by 3.2 basis points to 4.066 percent. Oil prices rose above $61 a barrel to a seven-week high due to a sharp drop in US gasoline stocks and concerns over Iran's nuclear program. US crude reached $61.40 a barrel, up by 45 cents. The price hit $61.49, the highest since Jan 2, after Iran's statement of not showing any weakness regarding its nuclear program. European shares were slightly down due to concerns over Iran and weak banking stocks, despite strong results from industrials and higher commodity prices. The FTSEurofirst 300 index was down 0.16 percent, with British and French indexes slightly lower and Germany's stable. Japan's Nikkei increased by 0.44 percent to a seven-year high, driven by exporters like Canon Inc benefiting from the weak yen. The increase was offset by a decline of up to 29 percent in Sanyo Electric Co. following news of a regulatory investigation and reports of unaccounted losses exceeding $1 billion. The MSCI All-Country World Index stood at 380.93, up by 0.05 percent.