SINGAPORE, Feb 26 The euro struck a seven-week peak against the dollar on Monday on risin

SINGAPORE, Feb 26 (Reuters) The euro struck a seven-week peak against the dollar on Monday on rising tensions over Iran's nuclear programme, which kept oil near this year's high.

A jump in gold prices to near nine-month highs also helped drive down the dollar, as Western powers prepare to meet in London on Monday to discuss tightening sanctions on Iran over its nuclear plans amid tough talk between Washington and Tehran.

Tokyo's Nikkei stock index rose 0.5 percent on its steady march towards seven-year highs as Softbank Corp., Nippon Steel Corp. and counters popular with retail investors gained from improving sentiment.

''With the rebound of Sony Corp. and steel companies, individual investors have bounced back a lot,'' said Katsuhiko Kodama, senior strategist at Toyo Securities.

Nikko Cordial Corp. surged 15 percent after sources said Citigroup is in talks to raise its stake in the scandal-hit brokerage to more than a third in a $2.8 billion deal. Japan's third-largest securities firm faces a possible delisting after admitting in December to falsifying documents.

Sanyo Electric Co. Ltd. rebounded more than 5 percent from a 29 percent slump on Friday after the struggling consumer firm said it was being investigated by regulators and a newspaper reported it had failed to account for more than $1 billion in losses.

The euro climbed to $1.3191, the highest since Jan. 3, before easing to $1.3189 The U.S. currency shed 0.2 percent to 120.83 yen after rising as high as 121.64 yen last week, near the four-year high of 122.20 yen hit in January.

''Continuing concern over Iran's nuclear programme caught attention,'' said currency strategists at BNP Paribas in a note to clients.

Iran insists it is entitled to nuclear power to generate electricity but many in the West suspect is is trying to build an atomic arsenal.

The dollar has also been pressured by expectations for the Federal Reserve to trim rates from the current 5.25 percent later in the year, while the European Central Bank is poised to raise rates further next month to 3.75 percent from 3.5 per cent.

The euro was steady around 159.35 yen near the all-time high of 159.63 yen hit last week and eyeing the 160-yen mark.

The yen fell to record lows versus the euro last week despite the quarter-percentage point cut in interest rates by the Bank of Japan, as the central bank is seen taking at least six months before raising rates again.

Japanese government bonds inched up as a rise in U.S. Treasuries supported sentiment, as investors remained wary of pushing yields too low soon after the BOJ raised rates.

MSCI's measure of Asian shares excluding Japan gained 0.1 percent, reflecting a mixed regional market as Australia, South Korea eased from last week's record-highs and Hong Kong fell, while Taiwan jumped on its return from the Lunar New Year holidays.

Singapore briefly hit an all-time high.

Taiwan tech shares rose, led by Hon Hai Precision Industries , which jumped to above 4 percent, after its parent Hon Hai Group set an ambitious sales target for 2007.

Strong oil prices stoked fears about the impact on global consumer demand and South Korea's export-dependent economy, hitting exporters such as Hyundai Motor Co. and chip maker Samsung Electronics Co. Ltd.

Concerns over rising defaults in the subprime mortgage industry -- serving borrowers with poor credit histories at higher-than-average interest rates -- hit financial services shares, pushing the Dow average down 0.3 percent, its third-straight session of losses. The tech-led Nasdaq shed 0.4 per cent.

The U.S. market will seek direction from a series of economic data, including the Conference Board's Consumer Confidence Index for February due on Tuesday and an update of the Reuters/University of Michigan Surveys of Consumers for February due on Friday.

IRAN TENSIONS U.S. crude rose for a fourth day, up 31 cents to $61.45 a barrel and nearing a fresh 2007 high, as fears over Iran added to concerns over on an unexpectedly deep drop in U.S. fuel stocks and supply disruptions.

Vice President Dick Cheney's reiterated on Friday that the United States retained all options in keeping Iran from acquiring nuclear weapons, even though the White House has insisted it was seeking a diplomatic solution.

''Iran is a key factor for oil prices recovering from just below $50. However, it is a psychological factor and many market players are sceptical at the same time,'' said Tetsu Emori, the chief strategist at Mitsui Bussan Futures.

''Iranian oil supplies weren't disrupted last year although this issue was discussed many times.'' Gold rose to $686.50/687.20 an ounce from $682.00/682.70 late in New York on Friday, when it had rallied to a nine-month high at $688.20 on safe-haven buying, up nearly 15 percent from lows in early January.

REUTERS PV RN1156