TOKYO - The dollar was slightly firmer in Asian trade yesterday but still hovered around four-month lows against the euro on rising crude oil prices and expectations of narrowing interest rate differentials, dealers said.

Oil prices rose overnight in New York to over $69 a barrel before easing amid unrest in Nigeria and escalating tensions over Iran's nuclear program.

"The dollar was weighed down largely by higher oil prices related to uncertainty in the situation over Iran's nuclear program," Kosuke Hanao, head of forex sales at Royal Bank of Scotland said.

"Oil prices hiked to nearly $70 and the market is now focused on the higher oil prices, Hanao said.

The dollar edged higher to 114.52 yen in Tokyo morning trade from 114.49 yen in New York late Monday.

The euro was down slightly at $1.2296 from $1.2302, which was its highest level since mid-September.

The European currency was little changed at 140.84 yen from 140.82 yen. The US currency had come under pressure on comments from Federal Reserve and European Central Bank officials that were seen as suggesting that the difference between the US and eurozone interest rates could shrink this year.

"Federal Reserve officials reinforced expectations that US interest rates were close to peaking just as European Central Bank members suggested further rate hikes were in the pipeline," National Australia Bank currency strategists said in a market note issued in Sydney.

The market was also waiting for December quarter US gross domestic product figures to be released Friday, with the data expected to show a slowdown.*AFP

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