* Dollar/yen sheds losses as equities rebound
* Underlying optimism on US tax reform supports dollar
* Canadian dollar nurses wounds after dovish-sounding BoC
* Bitcoin tops record $14,000, then slips below (Adds details and quotes, updates prices)
By Shinichi Saoshiro
TOKYO, Dec 7 (Reuters) - The dollar edged up against peers on Thursday, shaking off earlier losses versus the yen, supported by signs that investors' risk appetites were improving again and by optimism on U.S. tax reforms.
The greenback was 0.1 percent higher at 112.380 yen JPY= after dropping by 0.25 percent overnight.
The dollar had slipped against the yen after President Donald Trump on Wednesday recognised Jerusalem as the capital of Israel, imperilling Middle East peace efforts and upsetting Washington's friends and foes alike. impact of the 'risk off' moves that weakened the dollar against the yen stemming from the Middle East developments appears to have been limited. It likely served as a pretext for speculators to cover some yen shorts," said Yukio Ishizuki, senior currency strategist at Daiwa Securities in Tokyo.
"We could still see participants try to sell the dollar on upcoming 'risk off' events. But the dollar is positioned to absorb much of the selling pressure, with many players poised to buy on dips," he said.
Dollar/yen on Thursday rose in line with a surge in Tokyo shares, which had slumped the previous day on Middle East concerns.
But considering the Nikkei's .N225 gains - the index was up more than 1 percent- the dollar's rise versus the yen appeared limited, some observers noted.
"The decoupling that has begun taking place between equities and currencies is one of the key market themes of 2017," said Daisuke Karakama, chief market economist at Mizuho Bank.
The U.S. currency rose to a two-week high against a basket of six major currencies as optimism towards U.S. lawmakers' making progress on tax legislation grew. Upbeat U.S. private-sector employment data released on Wednesday also provided support.
U.S. Senate Republicans agreed to talks with the House of Representatives on sweeping tax legislation on Wednesday, amid early signs that lawmakers could bridge their differences and agree on a final bill ahead of a self-imposed Dec. 22 deadline. dollar index .DXY was little changed at 93.543 after rising to 93.650 overnight, its highest since Nov. 22.
The euro was steady at $1.1803 EUR= after slipping 0.25 percent overnight, when it hit a two-week low of $1.1780.
Bitcoin briefly soared to a record high of $14,095.00, continuing its surge from below $1,000 at the beginning of the year, despite questions about the cryptocurrency's real value and worries about a dangerous bubble.
Later, Bitcoin was down 0.25 percent at $13,590.01 at the Luxembourg-based Bitstamp exchange BTC=BTSP .
The Canadian dollar nursed deep losses suffered overnight after the Bank of Canada held interest rates steady and showed enough caution to dampen expectations for a hike early next year. CAD/
The loonie was effectively flat at C$0.9895 per dollar CAD=D4 after retreating 0.8 percent the previous day.
The Australian dollar, hit the previous day by weaker than expected local gross domestic product numbers, extended losses against the buoyant dollar.
The Aussie was 0.2 percent lower at $0.7548 AUD=D4 .
The New Zealand dollar held up for a while after showed that housing prices in the country jumped 6.4 percent in November. the kiwi last traded at $0.6859 NZD=D4 , down 0.3 percent on the day.
Sterling was down 0.1 percent at $1.3383 GBP=D3 after touching a one-week low of $1.3358 overnight amid growing concerns that a Brexit deal may be unlikely before next week's key EU summit.
The immediate focus for the pound was on British Prime Minister Theresa May, who is expected to propose suggestions to Brexit negotiators to try to break an impasse on the issue of the Irish border. Dollar/yen, Nikkei
http://reut.rs/2jp6HfN
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