* Long-dated Treasury yields scale back from multi-year highs
* Wall St stocks mixed, uncertainty prevails in Asia
* Italian bond yields fall as govt moots "collaboration" with EU
* Sterling strengthens on hopes for Brexit deal (updates throughout, changes byline, dateline)
By Sujata Rao
LONDON, Oct 10 (Reuters) - World stocks inched off eight-week lows on Wednesday as U.S. long-dated borrowing costs held below multi-year peaks, though market gains were checked by fears for global economic growth and the possibility of an Italy-EU clash over budget spending.
The effects of the global bond selloff that took U.S. 10-year bond yields to seven-year highs this week were exacerbated by economic growth concerns stemming from trade conflicts and $80-per-barrel oil, with the International Monetary Fund cutting its world GDP forecasts for the first time in two years.
The IMF's estimates for the United States and China were both reduced, with the fund predicting the countries would feel the brunt of their trade war next year. It also slashed its expectations for emerging markets for 2019.
MSCI's world equity index rose 0.14 percent after four days in the red. However, while Japan's Nikkei and MSCI's Asia-Pacific index outside Japan rose 0.2-0.3 percent, European shares slipped 0.2 percent, undermined by more bellicose rhetoric from Italian politicians.
Milan-listed stocks traded 0.15 percent higher however, rising off 18-month lows hit earlier in the week.
Wall Street was set to open flat to weaker, futures showed.
There are also concerns over China where the yuan slipped against the dollar for the fifth session out of the past six to approach four-year lows hit in August .
The focus is on next week's semi-annual U.S. report on currencies amid Treasury officials' comments that recent yuan depreciation has raised concerns in Washington.
However, some relief came from U.S. Treasuries where 10-year borrowing costs kept well below a 7-1/2-year peak of 3.261 percent.
"We are at some sort of critical moment, a crossroads, for bond and equity markets," Marie Owens Thomsen, global head of economic research at Indosuez Wealth Management, said noting that while U.S. 10-year yields at 2 percent unequivocally favoured equity investment, this was not so above 3 percent.
"This January we took out the 2 percent (yield) handle and now we are wondering if we are permanently taking out the 3 percent handle as well. That makes the climate for equities much more challenging," Owens Thomsen added.
She cautioned though that signs of deceleration in world growth and IMF forecast cuts could curb the relentless rise in yields which was partly fuelled by buoyant U.S. economic data.
The Treasury selloff may have been curbed also after U.S. President Donald Trump complained said the Federal Reserve was going too fast in raising rates.
But they rose 1.3 basis points to 3.22 percent on Wednesday, also getting some traction from Europe, where German yields inched up amid fresh concerns in Italy.
Italian bond yields pulled off multi-year highs on Tuesday after Economy Minister Giovanni Tria pledged action to restore calm should market turbulence escalate into financial crisis. Yields slipped further after Tria said he expected "collaboration" with the EU on the budget issue.
But markets' pressure has not dissuaded the government from a bigger-than-expected budget deficit; ministers' comments appear to indicate they are prepared to defy European Union critics.
The developments have raised risks of a credit ratings downgrade for the country, with a knock-on effect for Italian banks which are big holders of government bonds. However the banks' shares received a boost after an EU official told Reuters regulators were "intensely" monitoring Italian banks' liquidity levels but there was no cause for alarm.
"I am not saying Italy is managing the situation in an ideal fashion but at the current junction I don't think they are anywhere near a position where they can provoke another crisis in Europe," Owens Thomsen said.
Politics were also in focus in Britain where reports of progress between the UK and the EU in negotiating a Brexit deal pushed the pound to 3-1/2-month highs against the dollar.
Analysts at Eurizon SLJ Capital said parliamentary approval looked likely for Prime Minister Theresa May's Brexit deal. The Times newspaper reported 30-40 opposition Labour MPs would back the agreement.
"Already significantly undervalued, sterling has upside risks, especially against the euro," Eurizon SLJ told clients, arguing that $1.55 was "fair value" for the currency.
The dollar was flat against a basket of currencies, easing from seven-week peaks after Treasury yields retreated. That allowed emerging currencies, hard hit in recent days, to make tentative gains.
The IMF growth forecast cuts weighed on oil prices, pulling them off 4-1/2-year highs above $85, though the market was somewhat supported by Hurricane Michael which has shut nearly 40 percent of crude output in the U.S. Gulf of Mexico.
Additional reporting by Tomo Uetake in Tokyo, Editing by William Maclean