Oil prices reached record levels on Monday on concerns about tight supply, while Japanese government bonds, Tokyo shares and the yen dipped as investors faced the prospect of an early election. Tokyo's benchmark Nikkei average fell more than 1 percent to a one-month low as a key parliamentary vote approached, but after the government lost the vote, and an early election looked likely, it recovered to close up 0.1 percent. The yen remained weak, and Japanese government bonds fell to a four-month low. "A political vacuum would invite all kinds of speculation ... and if foreign investors dump Japanese shares, the yen's slide could intensify," said Masamichi Koike, joint general manager in the trading department at Sumitomo Mitsui Banking Corp. Fears of possible rate hikes and strong crude prices could dampen U.S. buying power weighed on export and technology shares. "Concerns the Fed could continue raising interest rates for a longer time than the market had expected, coupled with higher oil prices, could extend the current correction," said an analyst in South Korea. U.S. stocks closed lower. The Dow Jones industrial average ended down 0.5 percent and the Nasdaq Composite Index fell 0.6 percent. Japanese Prime Minister Junichiro Koizumi is now set to call a snap election, public broadcaster NHK said on Monday, after parliament's upper house rejected bills to privatise the postal system. Political analysts have said Koizumi's divided ruling Liberal Democratic Party (LDP), which has ruled for most of the past half century, was in danger of losing the election for parliament's powerful lower house. The yen hit a three-month low against the euro as the vote approached, and remained weak after the government's loss was confirmed. The dollar bought around 112.48 yen up from 111.87 in late U.S. trade on Friday. The euro was at 138.61 yen after rising to around 138.75 yen, its highest level since late April. It bought 138.36 yen in late U.S. trade. NYMEX crude for September delivery hit a record at $62.69 a barrel, and stood 55 cents higher on the day at $62.55. Traders said they feared a host of U.S. refinery outages could strain fuel supplies, and that government changes in Saudi Arabia and Iran had revived a geopolitical risk premium