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FOREX-Dollar recovers from dive on FBI's Clinton probe

(Updates prices, adds comments; changes byline, dateline, previous LONDON)

* Dollar rises against major rivals after falling Friday

* Euro down vs dollar after hitting 11-day high in early trading

* Negative Japanese government bond yields boost dollar

* Mexican peso recovers against dollar

* Dollar index on track for best month since Jan. '15

By Sam Forgione

NEW YORK, Oct (HKSE: 3366-OL.HK - news) 31 (Reuters) - The U.S. dollar rose against a basket of major currencies on Monday on reduced worries over the FBI's investigation of more emails linked to Hillary Clinton's use of a private server, while persistently low Japanese government bond yields also boosted the greenback.

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The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.27 percent at 98.611 after hitting an eight-day low of 98.242 on Friday on news of the FBI's probe. The index was on course for a monthly gain of 3.4 percent, its best since January 2015.

"The market is maybe taking a calmer approach to the FBI probe at this point than it was on Friday afternoon," said Shahab Jalinoos, global head of FX strategy at Credit Suisse (LSE: 0QP5.L - news) in New York.

News (Other OTC: NWSAL - news) of the probe hurt the dollar since Clinton is viewed as the candidate of the status quo, and a win for the Democratic candidate in next week's U.S. presidential election is generally seen by analysts as likely to be positive for the dollar.

A Clinton win is also viewed as clearing the way for the Federal Reserve to raise interest rates in December. There is greater uncertainty over what a victory for Republican candidate Donald Trump might mean for U.S. foreign policy, international trade deals and the domestic economy.

"This is just corrective price action, a little bit of a giveback," said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago, in reference to gains in major dollar rivals such as the euro, yen and sterling on Friday.

The dollar's rebound was modest, with the currency last up just 0.28 percent against the yen at 104.98 yen, still down from a three-month high of 105.530 yen touched Friday.

The Mexican peso, which hit a three-week low against the dollar of 19.1002 pesos on Friday, was last up 0.23 percent at 18.9160 pesos per dollar. The currency fell on news of the FBI probe since Trump's stances on immigration and trade relations are seen as key risks for the Mexican currency.

The euro was last down 0.35 percent against the dollar at 1.0945 after hitting an 11-day high of $1.0992 in early trading. Against the Swiss franc, the dollar was up just 0.14 percent at 0.9894 franc.

Higher yields on government bonds in the United States and Europe also supported the greenback against the yen, Jalinoos said.

Yields on benchmark 10-year Japanese government bonds were last at negative 0.049 percent, compared with 1.8362 percent for 10-year U.S. Treasury yields. (Reporting by Sam Forgione; Additional reporting by Patrick Graham in London; Editing by Dan Grebler)