TOKYO (Oct 31): The dollar was on the defensive on Monday as the FBI's new probe into private email use of Democratic presidential candidate Hillary Clinton shook markets' conviction of her victory in the U.S. presidential election.

The dollar's index against a basket of six major currencies slipped to 98.369, edging down from Tuesday's near nine-month high of 99.119.

The dollar tumbled late on Friday after the U.S. Federal Bureau of Investigation revealed its probe of newly found emails related to Clinton's use of a private server, rocking the Democratic candidate's presidential campaign barely more than week before voting day.

The market took the development as an advantage to her Republican rival Donald Trump, who has been trailing her in polls but has shown some signs of slight improvement in recent days.

Investors have tended to see Clinton as the candidate of the status quo, while there is greater uncertainty over what a victory Trump might mean for U.S. foreign policy, international trade deals or the domestic economy.

"There's no change in the market's perception that the Fed will raise rates in December. And the biggest question for the market is the pace of the Fed's rate hike next year," said Kyosuke Suzuki, director of forex at Societe Generale.

"But the political development is raising uncertainty. The markets would be reluctant to do much ahead of the U.S. elections, he added.

Still, on the month, the dollar index is up 3.0 percent so far, matching its biggest monthly gain so far this year made in May.

Against the yen, the dollar slipped to 104.62 yen, down slightly from late U.S. levels and off Friday's three-month high of 105.54, as the Japanese currency's safe-haven status at times of uncertainty helped it weather a data showing a stalling in Japan's industrial output.

The euro traded at $1.0978, having gained almost 0.9 percent on Friday, its largest one-day rise in nearly two months and more than one percent above its 7 1/2-month low of $1.08510 touched on Tuesday.

The Mexican peso, seen as the best barometer on the markets' view on the U.S. election, slipped 0.3 percent in early Asian trade to 19.025 to the dollar, near three-week low of 19.1005 touched on Friday.

Earlier on Friday, the dollar had gained on stronger-than-expected U.S. GDP growth, which cemented expectations of a Federal Reserve rate hike in December.

Money markets are still pricing in about 70 percent chances of a rate hike in December, even after the FBI's new probe.

The Fed is widely expected to keep its policy on hold at its policy meeting ending on Wednesday.

The Bank of Japan is starting its two-day policy review on Monday but is also widely expected to stand pat.

In Europe, the euro zone flash GDP estimate and inflation data are due later in the day.

While the data may not significantly change investors' perception on the euro zone economy, stronger readings could fuel talk that the European Central Bank may scale back its bond buying programme next year.  - Reuters