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* FBI will not pursue charges vs Hillary Clinton for email
* Improved Clinton chances boosts dollar vs major currencies
* Mexican peso headed for best day in nearly two weeks
By Dion Rabouin
NEW YORK, Nov 7 (Reuters) - The dollar rose on Monday after the FBI decided that U.S. Democratic presidential nominee Hillary Clinton will not face criminal charges, which was seen as a boost to her chances of winning Tuesday's contest with Republican rival Donald Trump.
The greenback gained 0.77 percent against a basket of currencies after getting hammered last week when FBI Director James Comey said the agency was looking at another large batch of Clinton emails, strengthening chances of a Trump victory, an outcome that was seen as likely to send shock waves through markets.
The Federal Bureau of Investigation said late Sunday it stood by its earlier finding that no criminal charges were warranted against Clinton for her email practices. The announcement sent the dollar surging against the yen and the euro, and offered relief to the Mexican peso.
"It's all the election. It's all the Comey letter," said Joseph Trevisani, chief market strategist at Worldwide Markets in Woodcliff Lake, New Jersey, referring to the currency moves.
"Markets want continuity and essentially they want what they have priced in and both point towards Clinton. That's why markets are reacting to anything that boosts Clinton's chances by taking back some of the selloff from the past week or so."
Some analysts treated the election outcome with caution after the British vote to leave the European Union in June took markets by surprise and sent them into disarray.
"Brexit was a hard lesson for many, and it's still in the recent memory," Oanda senior market analyst Craig Erlam said.
Erlam added the dollar's recovery might be muted by speculation that Clinton is not out of the woods yet.
"It's hard to know what damage the reopening of the investigation did to Clinton's chances," he said.
Owing to Trump's stance on immigration, foreign policy and trade, the Mexican peso has taken a heavy hit, down at one point in September by as much as 17 percent against the dollar since he won the Republican nomination in July.
Boosted by the FBI's most recent decision, the peso gained as much as 2.5 percent to hit a 12-day high of 18.55 per dollar.
The dollar was up 1.3 percent at 104.50 yen. It declined to 102.550 against the safe-haven Japanese currency last week as polls showed a tightening U.S. presidential race.
The euro fell 0.7 percent against the dollar to $1.1056. Sterling also slipped against the dollar, falling 0.9 percent to $1.2408. (Additional reporting by Patrick Graham and Yumna Mohamed in London; Editing by Jeffrey Benkoe)