* U.S. politicians cite progress as stimulus talks continue
* Vaccine roll-outs stoke risk appetite, undermining dollar
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Kevin Buckland
TOKYO, Dec 16 (Reuters) - The dollar languished near 2 1/2-year lows on Wednesday as progress toward a massive U.S. government spending bill and COVID-19 relief measures whetted risk appetite, sapping demand for the safest assets.
Also supporting sentiment, the U.S. expanded its roll-out of a vaccine from Pfizer Inc (NYSE:PFE) PFE.N and German partner BioNTech SE BNTX.O , while another developed by Moderna Inc MRNA.O appeared set for approval this week. British pound held on to more than 1% of gains made on Tuesday following a report that an elusive Brexit trade deal may now be close, even as British Prime Minister Boris Johnson repeated that the most likely outcome of talks was no deal. dollar changed hands at $1.21540 per euro EUR= , near the 2 1/2-year low of $1.2177 touched on Monday. It traded at 103.64 yen, after declining 0.4% against the Japanese currency on Tuesday. JPY=
The pound was last at $1.3444 GBP=D3 , following a 0.9% jump in the previous session. It reached $1.3540 earlier this month, a level not seen since mid-2018.
"Because of all the positives that have hit the market, from vaccines to stimulus, we're seeing dollar weakness across the board," said Bart Wakabayashi, Tokyo branch manager of State Street (NYSE:STT) Bank in Tokyo.
"There's a feel good momentum in the market."
Top U.S. congressional leaders began a second meeting on Tuesday to finalise $1.4 trillion in spending and end a standoff on coronavirus relief, after signalling optimism following their first gathering. are also keeping an eye on the outcome of a two-day Federal Reserve policy meeting on Wednesday. Policymakers are expected to keep the key overnight interest rate pinned near zero and signal it will stay there for years to come, a decision that analysts say will further boost investors' risk sentiment.
Many analysts also expect new guidance on how long the Fed will keep up its massive bond-buying program. dollar index, which measures the greenback against a basket of currencies, was last at 90.477 =USD , after sinking as low as 90.419 on Monday, a level not seen since April 2018.
The Australian dollar was little changed at 75.525 U.S. cents AUD=D4 , near the 2 1/2-year high of 75.780 it recorded Monday.
The New Zealand dollar traded at 70.86 U.S. cents NZD=D4 after reaching 71.20 on Monday for the first time since April 2018.