The dollar surged against the Japanese yen Monday, and stock prices were sharply lower due to concern over higher oil prices and the possibility of a U.S. interest rate increase. At the end of trading, the dollar was quoted at 122.00 yen, up 0.85 yen from Friday's close of 121.15 yen. It opened higher at 121.60 yen and moved between 121.58 yen and 122.00 yen throughout the day. On the Tokyo Stock Exchange, the Nikkei Stock Average of 225 selected issues, a 43.06-point loser during Saturday's half-day session, fell another 380.27 points or 1.3 percent to close at 28,983.32 points. A dealer at the Bank of Tokyo said the dollar ``was being bought in expectation that U.S. monetary authorities may (raise) prime lending rates and the nation's discount rate,'' the rate the Federal Reserve Board charges on loans to commercial banks. Meanwhile, Bank of Japan Governor Satoshi Sumita told reporters that Japan's central bank was closely watching for a possible move by the Federal Reserve, Kyodo News Service said. The dollar's strength paralleled the firmness of the British pound despite an increase in British interest rates after news last week of London's wider-than-expected current account deficit, the dealer said. The firmer dollar, expectations of a move by the Federal Reserve and higher oil prices encouraged investors to take profits from the recent rally on the Tokyo stock market, pushing prices lower, analysts said. Volume during morning trading was a relatively heavy 750 million shares, with most activity in heavy industrials like Kawasaki Heavy Industries, said Nick Ganner of Citicorp Scrimgeour Vickers International Ltd. Steels and heavy industrials were mixed, while the broader market was weaker. Fisheries were helped by press reports over the weekend that said the Soviet Union's state-owned fish processing company and Taiyo Fishery have reached an agreement to set up a joint venture on the Soviet island of Sakhalin to process catches from Japanese and Soviet vessels.