TOKYO - The dollar nudged higher in Asian trade on Monday as investors sought refuge in the currency amid growing tensions between major oil producers Iran and Iraq.

The dollar rose to 90.49 yen in Tokyo morning trade from 90.40 in New York late Friday. The euro dropped to $1.4325 from $1.4343 and to 129.63 yen from 129.65.

The greenback was bought after Iraq said Iranian troops had occupied a southern Iraqi oil well in a disputed section of the border, NAB Capital strategists said in a note to clients.

Iraq's government said Sunday that Iranian troops had left after arriving Friday. Iran rejected claims it was an Iraqi oil well, saying the facility lies within its borders.

It was the first serious incident between the two neighbours since the US-led invasion of 2003 that toppled Saddam Hussein, whose forces fought a 1980-1988 war against Iran.

The dollar was also supported by recent upbeat US economic data that contrasted with gloomy news from Europe, where worries are growing that government debt problems may threaten an economic recovery, dealers said.

"US equities have been rising and the market's hopes for a recovery is what has been driving the dollar and caused investors to focus on the greenback," said Chuo Mitsui Trust Bank head of forex Yosuke Hosokawa.

"Investors will be focusing on more economic data. In Europe, compared with the US, there have been more worries over monetary policies or public finances. But at the same time, it's not as if all European members are in that situation, so it is hard for investors to find trading cues."

In the US, home sales and durable goods orders are among the economic indicators due to be released this week.

Market players will also be looking at Wednesday's minutes of the Bank of England's most recent policy meeting for any clues on when it will exit its emergency measure of flooding markets with cash, known as quantitative easing.

Markets largely overlooked fresh data out of Japan showing the world's second largest economy logged a trade surplus for a 10th straight month in November thanks to recovering demand from the United States and China.