(Updates prices, adds comments; changes byline, dateline, previous LONDON)
* Dollar nears multi-week low vs yen
* Peso hits record low vs dollar of 21.6250 pesos
* Traders lighten long-dollar bets
By Sam Forgione
NEW YORK, Jan 10 (Reuters) - The U.S. dollar edged lower against a basket of major currencies on Tuesday on nervousness ahead of U.S. President-elect Donald Trump's first news conference set for Wednesday, while the Mexican peso hit a record low.
Investors fretted that Trump, who takes office on Jan. 20, could shake markets at the news conference by taking an aggressive line on issues such as trade policy and relations with China.
The dollar index, which measures the greenback against a basket of six major currencies, has climbed 4 percent since Trump's election on Nov. 8 as investors have bet his promised program of fiscal expansion will boost inflation and growth, leading to a faster pace of interest rate rises from the Federal Reserve.
Speculators had boosted net long bets on the dollar for a third straight week in the week ended Jan. 3, data from the Commodity Futures Trading Commission and calculations by Reuters showed on Friday.
Uncertainty ahead of Trump's comments, however, dampened demand for the dollar. Analysts also said traders were watching hearings for the Republican president-elect's choices for senior administration posts, which started on Tuesday with U.S. Senator Jeff Sessions, picked for attorney general.
"We're in a political event risk this week," said Mazen Issa, senior currency strategist at TD Securities in New York. "Markets pretty much are in a holding pattern right now."
The dollar index was last down 0.18 percent at 101.750. The index hit a 14-year high on Jan. 3 of 103.820. The greenback fell as much as 0.7 percent against the yen to 115.21 yen , near Friday's more than three-week low of 115.04 yen.
The euro, which hit an 11-day high of $1.0626 in early trading, was last up 0.15 percent at $1.0588.
The Mexican peso hit a new record low against the dollar of 21.6250 pesos as traders avoided exposure to the currency ahead of Trump's news conference. The peso has fallen on worries over the prospect of Trump's protectionist policies.
"Mexico remains the primary victim of the election result, and I anticipate we'll see more of it," said David Gilmore, partner at FX Analytics in Essex, Connecticut.
Sterling steadied after hitting $1.2107 in early trading, its lowest level since Oct. 25, and was last up slightly at $1.2166.
Sterling had fallen on disquiet over whether Britain will undergo a "hard" exit from the European Union, in which immigration controls get priority over access to the single market.
Reporting by Sam Forgione; Additional reporting by Jemima Kelly in London; Editing by Will Dunham