The dollar hit a seven-year high against the yen on Wednesday ahead of minutes from the U.S. Federal Reserve's latest policy meeting, as investors bet on an increasingly divergent outlook for the world's major economies.

European stock markets turned positive after a weak start, helped by some encouraging broker upgrades, with Switzerland's SMI equity index hitting the 9,000-point mark for the first time since late 2007. .SSMI

U.S. equity futures pointed to a flat opening on Wall Street SPc1 DJc1 while oil prices recovered a touch but stayed near four-year lows on signs of disagreement between OPEC members before a meeting next week. [O/R]

The Fed is expected to raise interest rates at some point in 2015 as the U.S. economic recovery broadens, but markets will be looking closely at the minutes due later in the day for any signs of when the first hike will happen.

Petr Krpata, currency strategist at ING, said the Fed minutes were likely to retain the hawkish tone of the central bank's statement following its October meeting.

In contrast, the Bank of Japan is expected to keep policy very loose for a much longer period, and last month announced it was expanding its already-huge monetary stimulus programme in an effort to spur the economy and boost inflation.

The BoJ kept monetary policy unchanged on Wednesday with Governor Haruhiko Kuroda telling a news conference the bank's stimulus was exerting its intended effect, just two days after data showed Japan unexpectedly slipping back into recession.

The yen JPY= fell as low as 117.655 to the dollar, its weakest since October 2007, and was last close to that low at 117.605, down 0.7 percent on the day.

"The yen has not been so weak against the dollar in real terms -- that is, if you factor in inflation -- since the 1980s," said Ugo Lancioni, head of currency management at investment house Neuberger Berman in London.

"There is strong political will to weaken the yen further but it is already at extremely low levels, and we struggle to see the yen substantially weaker than where it is now."

GERMAN STOCKS UP

Germany's DAX equity index .GDAXI, was up 0.6 percent at a 1-1/2 month high, putting it on track for its fifth consecutive day of gains -- the index's best run since early September -- after a run of better data from Europe's biggest economy.

"I think we are just waiting for the Fed really. The DAX is leading the way again, but we are just drifting higher," said ETX Capital's Head of Index & Equity Market Making Mark Priest.

The FTSEurofirst 300 .FTEU3 index of top European shares was up 0.3 percent at 1,364.41 points, having fallen to a low of 1,355.67 earlier in the session.

The STOXX Europe Basic Resources index .SXPP, however, fell 0.9 percent, the worst sectoral performer in Europe after China's iron ore futures fell nearly 5 percent to a record low.

German Bund yields edged up after Bank of England minutes showed two policymakers again voted for rate hikes despite a weaker economic outlook -- a hawkish stance that drove some in the market to anticipate less caution from the Fed as well.

Ten-year Bund yields DE10YT=TWEB, which set the standard for euro zone borrowing costs, rose 2 basis points to 0.82 percent, having traded as low as 0.79 percent earlier.