* Optimism about progress on U.S. tax supports greenback
* Bitcoin rockets to another record high above $12,800 (Updates prices and market activity to U.S. market open; new byline, changes dateline; previous LONDON)
NEW YORK, Dec 6 (Reuters) - The dollar edged higher against a basket of major currencies on Wednesday, on optimism about progress on U.S. tax legislation and lawmakers' efforts to avert a U.S. government shutdown on Saturday.
The dollar index, which measures the greenback against six rival currencies, was up 0.17 percent at 93.54.
"The dollar is finding some support on expectations that Congress is going to pass tax legislation sometime this year," said Sireen Harajli, FX strategist at Mizuho in New York.
Republicans in the U.S. House of Representatives began staking out their positions on final tax legislation on Tuesday, days ahead of talks with the Senate to shape the tax package.
Republicans hope to approve a final bill and deliver it to President Donald Trump's desk before Christmas. If they succeed, it would be the first major U.S. tax overhaul in 31 years and the first big Republican legislative victory since Trump took office in January.
"Also, some of the concerns about a government shutdown have been alleviated," Harajli said.
Democratic leaders in Congress on Monday accepted an invitation to meet Trump and Republicans for talks to avert a shutdown, even as the Democrats pressed demands on funding priorities and protecting young immigrants.
The dollar index moved higher after data from a payrolls processor showed U.S. private-sector employment growth eased in November even as the manufacturing sector added the most jobs in at least 15 years.
The dollar was 0.36 percent lower against the Japanese yen.
Mizuho's Harajli attributed some of the dollar's weakness against the yen to worries that Trump's upcoming announcement that the United States recognizes Jerusalem as the capital of Israel could threaten stability in the region.
The yen tends to benefit during geopolitical or financial stress as Japan is the worlds biggest creditor nation and there is an assumption that Japanese investors will repatriate funds should a crisis materialize.
"It's a safe-haven play," Harajli said.
Bitcoin extended its eye-popping rally, breaking above $12,000 to a record high despite questions about the cryptocurrency's real value and worries about a bubble.
Sterling extended an earlier decline to hit a one-week low after the Sun newspaper's political editor said on Twitter a Brexit deal is unlikely this week.
Sterling was 0.42 percent lower against the dollar at $1.3385.
The Canadian dollar hit a three-day low against its U.S. counterpart after the Bank of Canada held interest rates steady. (Reporting by Saqib Iqbal Ahmed; Editing by Meredith Mazzilli)