* MSCI global stock index tags first gain in 8 sessions
* Italy, Sweden help deliver gains in European shares, FX
* U.S. Republicans poised to unveil further tax cuts (Updates to close of U.S. equity market)
By Trevor Hunnicutt
NEW YORK, Sept 10 (Reuters) - An index of global stock markets rose on Monday for the first time in eight trading sessions on optimism about policy from Italy to the United States, dodging anxiety about the U.S.-China trade war.
MSCI's gauge of stocks across the globe added 0.06 percent, but it felt fragile after a sell-off in China overnight and emerging market shares hit their lowest level in more than a year.
Traders were bracing for a potential escalation in the Sino-U.S. row after President Donald Trump raised the stakes on Friday by saying he was ready to impose tariffs on virtually all Chinese imports to the United States. He also called on Apple Inc to make its products in the United States.
Emerging market stocks lost 1.21 percent for the day.
U.S. stock investors are looking to extend momentum after corporate profits hit a record high in the second quarter, while investors think an Italian debt crisis would spark a conflict with Europe that would hurt the domestic economy.
Congressional Republicans plan to unveil another round of tax cuts this week ahead of the Nov. 6 elections, helping support U.S. equities.
"Markets continue to be under pressure from a whole host of headwinds," said Tim Love, investment director of emerging market equities at fund manager GAM Holding AG.
The Dow Jones Industrial Average fell 59.47 points, or 0.23 percent, to 25,857.07, the S&P 500 gained 5.45 points, or 0.19 percent, to 2,877.13 and the Nasdaq Composite added 21.62 points, or 0.27 percent, to 7,924.16.
Stocks in Milan rose 2.30 percent after Economy Minister Giovanni Tria said on Sunday the coalition's more radical budget plans would be introduced gradually, reassuring investors that EU fiscal rules would be respected.
The euro was up 0.36 percent to $1.1593, and the gap between yields on Italian and more creditworthy German bonds was the narrowest in a month.
Shares in Stockholm and the Swedish crown strengthened after the nationalist Sweden Democrats gained less ground than polls had predicted in elections on Sunday.
The fresh 14-month low for emerging-market shares came amid turbulence in Argentina, Turkey, Brazil, Russia and South Africa, where currencies have been routed recently.
Some Asian economies are also vulnerable, Nomura analysts said, with many countries burdened by high private debt. They noted a "concentration risk" from some of the world's largest funds' heavy investments in emerging market assets.
The Indian rupee hit a record low and Indonesia's rupiah neared all-time lows.
The Australian dollar, a proxy for Chinese growth because Australia sells raw materials to China, was at its lowest in more than two years.
Copper, an industrial metal China uses heavily, lost 0.72 percent, adding to a nearly 20 percent collapse in price this year.
Beijing had warned of retaliation if Washington launched any new trade measures. But it is running out of room to match them dollar-for-dollar, raising concern it will resort to other measures, such as weakening the yuan or taking action against U.S. companies in China.
MSCI's broadest index of Asia-Pacific shares outside Japan closed down 1.2 percent at the lowest since July 2017.
The potential for a U.S. Federal Reserve rate hike after a U.S. labor market report showed wages posting their largest annual increase in more than nine years pushed 2-year Treasury yields to 2.715 percent, the highest in 10 years.
Risk aversion supported the 30-year bond, which rose 12/32 in price to yield 3.0835 percent.
Reporting by Trevor Hunnicutt; Additional reporting by Marc Jones in London and Swati Pandey in Sydney; Editing by Dan Grebler